As loans and aid dry up, US farmers face a new challenge of closure
CHICAGO (Reuters) – American farmers, already affected by the US-China trade war, face growing anxiety as the partial government shutdown nears the two-week mark, leaving aid payments in limbo and essential loans.
The shutdown has blocked aid for many farmers, who at this time of year are applying for federal loans as they pay the previous year’s owed bills and start budgeting for next season’s plantings. It also affects aid payments promised to mitigate the effects of the trade war.
The timing is particularly ill-suited for American farmers, who are already suffering the consequences of rising trade war tariffs and low prices for one of the major export crops, soybeans, with China’s purchases now being made. lagged behind in previous years.
“It’s just bad news on top of everything right now,” said Brian Duncan, whose family grows corn and soybeans and raises pigs in northwest Illinois.
The partial shutdown was triggered last month by President Donald Trump’s request for $ 5 billion to fund a US-Mexico border wall. Democrats now controlling the House of Representatives have pledged to fund the government through legislation, but Trump insisted that any move to fully reopen the government include wall money.
Pressure on Trump and lawmakers to end the partial shutdown is increasing from the agricultural sector. Many of the country’s 3.2 million farmers and ranchers are Republicans and have always been loyal to the president. But some farmers have warned that their support for a Trump campaign in 2020 is not guaranteed if the farm economy deteriorates and trade disputes continue to threaten demand for U.S. crops.
About a quarter of the federal government, or 800,000 workers – including some from the US Department of Agriculture – are unemployed.
USDA’s Agricultural Services Agency (FSA) directors and supervisors were ordered to reverse all previously arranged loan closings when the shutdown began, according to the agency’s published closure plan. in line. Agency officials could not be reached for comment on Thursday.
There is also growing concern among commodity traders and farmers that the USDA will postpone or possibly cancel a series of global grain supply and demand reports that are expected to be released on January 11. The data is monitored by farmers when developing their planting plans.
LEVELS OF UNCERTAINTY
U.S. grain farmers are increasingly looking to the FSA for loan assistance as they grapple with low commodity prices and trade issues in recent years. Banks have also relied on the agency to help them guarantee the loans they give to farmers, especially for shorter-term farm loans.
“This is the time of year when farmers talk to their bankers about getting operational loans, and the federal government money doesn’t come in,” Ted Seifried, vice president of the Zaner Ag Hedge Group told Chicago, which works with Farmers.
Last year, the government also pledged up to $ 12 billion in aid, much of it in the form of direct payments to soybean, pork and dairy producers, to help offset some of the losses. crops affected by Chinese tariff retaliation imposed in response to Washington’s tariffs on Chinese products. .
The deadline to apply for the aid is January 15, but the FSA offices where farmers must submit their applications have been closed since December 28.
Some farmers were hoping to plant more corn, in the hope that China will increase its corn imports for ethanol production. But planting corn can be more expensive than soybeans – a cost covered by many operators through loans or grants.
For Duncan, a wet and snowy harvest season meant he couldn’t finish harvesting last year’s corn before December 31 – making it too late for him to seek aid in the corn trade. for the moment.
“Between the tariffs and the government shutdown, it adds levels of uncertainty to farming that no one wants,” said Duncan, 54.
Reporting by PJ Huffstutter, written by Caroline Stauffer, additional reporting by Julie Ingwersen in Chicago and Ayenat Mersie in New York, editing by Rosalba O’Brien