For much of rural America, 2019 was defined by hardship. Severe weather conditions and a farm economy in a seemingly endless recession left many farm families wondering how they would pay their bills.
Thankfully, America’s farmers found some relief in the aid provided through the Market Facilitation Program (MFP). These payments were intended to reduce the harm from retaliatory tariffs levied on American farm products by foreign countries, like China.
While disappointed, we are not surprised that a recent Washington Post article cited the same old tired criticisms in their recent article calling the MFP payments a “farm bailout.”
The Washington Post touted an economist who claims that, with the challenges facing rural America, “you’d expect the farm sector to be in a terrible spot…It’s not.”
We beg to differ.
Without the MFP payments, net farm income in 2019 would fall to its 2nd lowest standing in the past 10 years.
The level of debt that farmers are carrying is the highest it’s been in decades. Farm debt has increased $100 billion in the last 10 years to $419 billion in 2019. It’s approaching the all-time high for farm debt that precipitated the 1980s farm crisis.
As the costs for inputs continue to rise and commodity prices remain depressed, farmers are burning through their equity. And farmers are breaking decade-old records that have sent ripples of concern through the farm lending sector: worst debt-to-asset ratio in 10 years, worst equity-to-asset ratio, worst liquidity, and the list goes on.
Even the Washington Post concedes that this so-called farm bailout isn’t much of a bailout at all, as the MFP payments “alone can’t make up for the collective hammering farmers took from four straight subpar years.”
The long-term downturn in the farm economy, now in its 7th year, has made it impossible for farmers to regain a stable economic footing. But, the MFP payments have been an extremely helpful tool in mitigating the drastic drop in farm income.
Without the MFP, America’s farmers and ranchers would have seen a massive 43 percent drop in net farm income from six years ago. Yet, even with MFP, America’s farm and ranch families experienced the incredible hardship of a 32 percent decline over this period.
And while farmers are glad Washington took action to help our rural communities, they would much rather earn their income from the market.
“There’s not a farmer that I’ve talked to around the country that would rather have aid instead of trade,” Dr. John Newton, Chief Economist at the American Farm Bureau Federation, recently told Farm Policy Facts’ Groundwork podcast.
It is absolutely essential that the Administration continue the MFP program until there is a full recovery in farm country.Source: https://www.farmpolicyfacts.org/2020/01/our-view-new-year-same-tired-criticisms-of-farm-policy