By Andrew Busch
COVID-19 food shortages raise questions about our ability to feed the country during the crisis. Prior to COVID-19, farming and agriculture may not have been covered significantly in the mainstream media as “hot” election topics, with healthcare and the Green New Deal taking on a much larger share of the interest. Now a focus on food production is paramount with the virus-generated economic shutdown crushing the food service industry, while consumer demand surges at the grocery store.
Farmers are culling pig herds as abattoirs have been shut down from outbreaks of the virus amongst their workers, and dairy farmers are dumping milk as demand for perishable foods has fallen. This is occurring despite the incredible need to feed families who have been negatively impacted by the shut-down. Comparisons to the 1930’s Great Depression appear to be apt.
Prior to the crisis, both Biden and Trump had put forward a number of policies or taken a number of actions with regard to rural aid and agriculture, though Trump’s previous policy positions look more favorable towards farmers than his proposed budget and policies in his next term. In the past, Trump has focused primarily on broader economic policies rather than ones focused specifically on agriculture or rural areas. On the other hand, Biden’s previous policies were primarily aimed at reforming the agricultural sector within the context of the Green New Deal and other environmental policies, to make the sector more focused on sustainability and renewable options.
To state the obvious: the political and economic landscape has changed and continues to rapidly change during the pandemic. Since the onset of the crisis, the Trump administration has been actively supporting the US agriculture sector with additional spending programs and executive orders. While hamstrung by not actively campaigning, Biden is likely to support the House-passed $3 trillion HEROES Act which contains additional agriculture spending. At this point, we can safely state that both candidates support additional spending for both rural areas and the agriculture sector.
For this research, we are going to review policy proposals prior to COVID-19 and then cover the response to it. This is necessary to provide context for how significantly policies have shifted and to provide a glimpse into what may come in the future.
- Biden and Trump take radically different approaches to the regulation of land and water for agricultural use, and Biden’s focus on sustainable farming and the Green New Deal may be misplaced in the current voter climate.
- The issue of biofuels is a surprisingly contentious one, and policies may have a greater impact than expected if energy markets continue to fluctuate wildly.
- Both Trump and Biden propose to take a strong stance on trade with China, to ensure that a trade policy is enacted that supports and protects American farmers.
Biden has put forward a policy plan called The Biden Plan for Rural America. He views rural America as “essential to the success of our country” and in his plan sets out an approach to rural development that is primarily focused on new farmers, sustainable agriculture, and the bioeconomy.
Many of Biden’s plans are targeted at small farms or focused on new farmers. A microloan program for small farms and beginning farmers was established under the Obama administration, and Biden plans to expand this by increasing the maximum loan cap to $100,000. The Department of Agriculture will also have increased funding for farm ownership and operating loans that also typically go to new farmers. For small- and medium-size farmers he also plans to strengthen the Sherman and Clayton Antitrust Acts and the Packers and Stockyards Act. (JoeBiden)
On sustainability, Biden would expand the funding for the Sustainable Agriculture Research and Education Program, as well as funding for the National Institute of Food and Agriculture. He plans and hopes to make the US agricultural sector the first in the world to go “net zero” for carbon emissions. Part of this aim for net-zero is that he would dramatically expand and fortify the pioneering Conservation Stewardship Program … to support farm income through payments based on farmers’ practices to protect the environment, including carbon sequestration.” (JoeBiden)
In addition, Biden would promote soil sequestration as an idea for carbon storage and proposes to make “significant investment in research to refine practices to build soil carbon while maximizing farm and ranch productivity.” (JoeBiden)
Another environment-focused plan for agriculture is that Biden plans to promote the bioeconomy strongly, as well as bio-based manufacturing. He hopes that by promoting the growth of this sector, modern manufacturing jobs could grow in rural America. His proposal is to take “every aspect of agricultural production – from corn stock to manure – to create chemicals, materials, fabrics, and fibers in a process that is good for the environment and creates new sources of revenue for farmers.” To facilitate this, Biden proposes that the federal government would connect or partner with agriculture research institutes, and funding would be provided so that each state or region could “build a competitive and low-carbon future in manufacturing that reflects climate impacts in their local communities.” (JoeBiden)
For supporting small towns and areas of rural poverty, he would increase funding for Community Development Financial Institutions (CDFIs). This is intended to increase access to credit for new and small businesses in those areas. Another proposal of Biden’s to alleviate rural poverty is to increase funding for the Rural Microentrepreneur Assistance Program. He would also set up a “Strike Force” that would help these communities to access federal funds and would follow the 10-20-30 formula to target poverty in rural areas. This proposal would “allocate 10 percent of funding to areas “where 20 percent or more of the population has been living below the poverty line for the last 30 years,” to all federal programs.” (JoeBiden)
Biden also proposes to invest funding in rural broadband access. Trump has also rolled out a similar proposal and implementation over the past few years, discussed in his section below. Biden explains that an “equalizer” is needed for the rural economy to succeed, and that broadband is a part of that: “rural Americans are over 10 times more likely than urban residents to lack quality broadband access.”
Another policy of Biden’s is to support supply-chain access and control for farmers, allowing them greater ability to negotiate prices and identify markets that could help them succeed.
On trade, he would “stand up to China by working with our allies to negotiate from the strongest possible position,” to promote a trade policy that “works for American farmers.” (JoeBiden)
With regard to the HEROES act, the bill contains a specific subsection called, “Assistance to Agriculture Producers and Other Matters Relating to Agriculture”. The bill has a wide range of provisions listed below:
- Assistance for market-ready livestock and poultry losses
- Direct dairy donation program
- Renewable fuel reimbursement program
- Emergency assistance for textile mills
- Direct payments to agricultural producers
- Increase lending from Commodity Credit Corporation
- Expanded conservation reserve program
- Block grants for specialty crops and farmers markets
- Nutrition assistance program
Upon its passage in the House, the White House stated that President Trump would veto the $3 trillion spending bill. (ABCNews)
Prior to the pandemic, the policies and actions taken by the Trump administration were in the form of two specific executive orders, the first in 2017 called Promoting Agriculture and Rural Prosperity in America. This order contains 6 sections:
- The purpose of the policy is: “in the national interest to promote American agriculture and protect the rural communities where food, fiber, forestry, and many of our renewable fuels are cultivated.”
- In sections two and three Trump established an Interagency Task Force on Agriculture and Rural Prosperity.
- In section four, the Order sets the purpose of the task force, to “identify legislative, regulatory, and policy changes to promote in rural America agriculture, economic development, job growth, infrastructure improvements, technological innovation, energy security, and quality of life,” including, for example:
- removing barriers to economic prosperity and quality of life in rural America;
- advancing the adoption of innovations and technology for agricultural production and long-term, sustainable rural development;
- strengthening and expanding educational opportunities for students in rural communities;
- empowering State, local, and tribal agencies;
- respecting the unique circumstances of small businesses that serve rural communities
- requiring executive departments and agencies to rely upon the best available science when reviewing or approving crop protection tools
- ensuring access to a reliable workforce
- promoting the preservation of family farms
- ensuring that water users’ private property rights are not encumbered
- improving food safety
- encouraging the production, export, and use of domestically produced agricultural products;
- advancing traditional and renewable energy production in the rural landscape; and
- addressing hurdles associated with access to resources on public lands for the rural communities that rely on cattle grazing, timber harvests, mining, recreation, and other multiple uses.
- Section five requires that “Within 180 days of the date of this order, the Secretary of Agriculture, in coordination with the other members of the Task Force, shall submit a report to the President.”
- In section six, the Order revoked Executive Order 13575, which established a council under the Obama Administration.
This Interagency Task Force on Agriculture and Rural Prosperity went on to identify over 100 areas in which the Federal government could take action to improve life for those in rural America. (USDA) They proposed five core calls to action:
- Achieving e-Connectivity for Rural America
- Improving Quality of Life
- Supporting a Rural Workforce
- Harnessing Technological Innovation
- Developing the Rural Economy
It appears that the development of connectivity for broadband in rural America has made progress, (USDA) but updates or reporting on the other goals is difficult to find. With regard to broadband in rural America, the update report from 2019 notes that $600 million in investment was obtained, potential tower locations were discovered and mapped, and community engagement was undertaken to determine where broadband availability and mobile availability are limited. The permit request process was also streamlined. (USDA)
In addition, the Office of Trade and Manufacturing Policy was established to “serve American workers and domestic manufacturers while advising the President on policies to increase economic growth, decrease the trade deficit, and strengthen the United States manufacturing and defense industrial bases.” (White House)
The second executive order that was widely hailed as helping farmers was his review of the “Waters of the United States” rule, which eased pollution regulations on smaller bodies of water but kept them for larger lakes and rivers. (CNN) Trump appears not to have released any additional executive orders or policies on agriculture or on waterways management.
Looking forward to the future proposals from the Trump administration, one proposal that Trump has put forward in his end-of-first-term budget is to trim the USDA’s discretionary budget from $23.8 billion in 2020, to $21.8 billion in 2021. He would also cut $57.7 billion of mandatory agricultural spending by 2030, including tightening edibility for farm payments, reducing funding for conservation programs, and reducing crop insurance subsidies. (Politico)
Trump’s proposed 2020 budget has not been received well by farmers, such as Illinois Farm Bureau President Richard Guebert, who stated: “We are very concerned and disappointed with the administration’s proposed budget.” Part of the budget changes include “eliminating subsidies to higher income farmers, and reducing overly generous crop insurance premium subsidies to farmers and payments made to private sector insurance companies.” (CNBC)
Essentially, what this means is that “farmers would pay a far larger share of crop insurance premiums — 52 percent instead of the current 38 percent.” Farm benefits would also be denied “to people with an adjusted gross income above $500,000 a year vs. the current cutoff of $900,000 AGI.” (Agriculture)
Another policy area is biofuels. In 2019, the Trump administration allowed for the year-round sale of E15, gasoline blended with 15% ethanol. This helps farmers as ethanol is produced by growing corn. However, the administration then also exempted many refineries from having to blend ethanol with their gasoline, which potentially reduced the demand for the biofuel that farmers were producing. (CNN) Then, in late 2019 the administration capitulated, and promised to put forth new rules that would be designed to increase ethanol demand. (New York Times) The move has been widely regarded as one of the ways that the administration is trying to reduce the impact of the trade war with China. (New York Times)
The trade war has already impacted farmers in several ways, and a subsidy package was also provided to farmers to attempt to buffer them from some of the negative consequences. (Axios) In addition, Trump stated that he would provide further subsidies to farmers going forward. (Politico) Some of the issues arising from the trade war could be alleviated to some extent by the US-China Phase One Trade Deal, which “cut some U.S. tariffs on Chinese goods in exchange for Chinese pledges to purchase more of American farm, energy and manufactured goods.” (Reuters)
Over the last month, serious doubts have arisen over whether China will be able to meet its pledge to buy large amounts of US agriculture products under the Phase One trade deal. As well, President Trump and his administration have been critical of the Chinese government response to the COVID-19 outbreak, further complicating the US-Chinese relationship. On a positive note, China is expected to receive a shipment of US ethanol, the first such cargo since the two countries struck an initial trade deal in January. (Reuters) Given the demand collapse for ethanol blended gasoline, this would be a welcome development for corn producers in the United States.
Since the pandemic, the Trump administration and Congress have created several rounds of stimulus spending for the agriculture sector. The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, was a $2 trillion spending bill that included provisions for the agriculture sector. Below are the major components.
- $9.5 billion financial support to farmers and ranchers impacted by coronavirus.
- $14 billion for Commodity Credit Corporation to fund programs like Price Loss Coverage and Dairy Margin Coverage.
- $8.8 billion for child nutrition programs
- $15.8 billion for SNAP
- $250 million for rural broadband, distance learning, telemedicine and hospitals.
The USDA also announced the Coronavirus Food Assistance Program (CFAP) to create a total of $19 billion in assistance to farmers, ranchers and consumers. The two major components are as follows:
- Direct Support to Farmers and Ranchers: The program will provide $16 billion in direct support based on actual losses for agricultural producers where prices and market supply chains have been impacted. It will also assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19.
- USDA Purchase and Distribution: USDA will partner with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels, and other food service entities, to purchase $3 billion in fresh produce, dairy, and meat. We will begin with the procurement of an estimated $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products. The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith based organizations, and other non-profits serving Americans in need. (USDA)
Finally, U.S. Secretary of Agriculture Sonny Perdue announced May 22nd that the Department is making available up to $1 billion in loan guarantees to help rural businesses meet their working capital needs during the coronavirus pandemic. Additionally, agricultural producers that are not eligible for USDA Farm Service Agency loans may receive funding under USDA Business & Industry (B&I) CARES Act Program provisions included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. (USDA)
The pandemic has changed the landscape for agriculture and rural policies, as it has changed the landscape for everything else. It has been instructive to see what policies were proposed prior to the outbreak, and what policies were proposed afterwards to adjust to the crisis
Prior to the outbreak, Trump’s policies did not provide a significant amount of economic stimulus for the agriculture sector, but his policies for removing waterway pollution restrictions and providing funding to offset the impacts of the trade war, did have a positive impact for the industry. Now, the COVID-19 spending programs have significantly ramped up the amount of federal dollars flowing to the sector. Yet, these programs were only in response to the economic shut-down and were necessary to maintain the nation’s food supply.
Trump’s previous budget proposals for reducing funding for things such as crop insurance may have made “crop insurance unaffordable for farmers, seriously undermining the farm safety net” and are now likely seen as a non-starter. (Agriculture)
Should the US-China Phase One trade agreement fall away, farmers will be severely negatively impacted, given that “agricultural exports to China fell from $15.8 billion in 2017 to $5.9 billion in 2018,” a side-effect that has dampened the agriculture sector’s ability to export. In addition, another partial side-effect of the trade war was that the “agriculture sector had record levels of debt in 2019 and the highest number of bankruptcies since 2011.” (PBS) This was an increase of 24% over the previous year. (Axios)
In addition, Brookings notes that with respect to the trade war, “Washington needs a strategy that deals with China as it is, not as it hopes it might be … [and] there’s little evidence the Trump administration is implementing such a plan. The phase one deal was a means for Trump and Chinese President Xi Jinping to pause their economic conflict, which served the domestic political interests of both sides. But in the big picture its impact will be limited.” (Brookings)
It is also difficult to know whether Trump’s proposals for additional subsidies will help to alleviate these issues. One challenge is the subsidies already provided were at the highest level in 14 yearsand were noted as “definitely not the normal” by Farm Bureau chief economist John Newton. (Axios) Prior to the COVID-19 outbreak, this would have raised some doubts as to the ability of high subsidies to continue, but this appears now to be a non-issue. During a time of $2 trillion stimulus programs, there is no political concern with the budgetary impact or debt levels new spending creates.
Before the outbreak, Biden’s plans and proposals were less negatively received in general. They also didn’t appear to target areas of the rural economy that are most important to farmers. For example, introducing measures to support more sustainable farming may be neutral to positive in terms of long-term impact, but are not necessarily a high priority for the rural voting base.
One of the issues with Biden’s plans are that his goals are for “net zero” emissions in the agricultural sector: this can result in “delayed emissions cuts … [and] insufficient focus on developing negative emissions technologies.” For example, soil storage simply delays the release of carbon, and does not solve the issue. It simply pushes out the problem to a hopeful future in which the appropriate carbon-negative technology exists. (Carbon Brief) Ben Lilliston, from the Minnesota-based Institute for Agriculture and Trade Policy, notes that these kinds of approaches “can get you so far, but at some point you need to address the sources of pollution, and you don’t see that with this proposal.” (Inside Climate News)
On the flipside, Trump appears to have no policies relating to carbon-reduction in the agriculture sector. However, the USDA stated in February that they aim to “increase production [in the sector] by 40 percent while cutting pollution from multiple aspects of the industry.” The goals they have are “reducing food waste by 50 percent by 2030, reducing water pollution from nutrient loss by 30 percent by 2050 and growing enough feedstock by 2050 to have biofuels constitute 30 percent of the nation’s fuel supply”. (The Hill)
To achieve these goals, the USDA will “focus on research, innovation and improving USDA’s ability to collect data on farmers’ conservation practices.” (Politico) The details of this plan are still unclear, and the goal for greenhouse gas reduction sets no specific target. In addition, there are no “repercussions for missing its benchmarks”, which means that the USDA cannot easily be held accountable for these goals. (The Hill)
Policies on biofuels are also particularly important for the agriculture sector, which means that Biden’s proposals for bio-based manufacturing and specifically biofuels may gain some traction with voters especially in corn growing states. This is due to the complex history around this issue and the clear desire of the industry for more support in terms of driving demand for biofuels.
On the positive side, the Trump administration’s proposals for biofuel blending requirements are intended to compensate farmers for the administration’s expanded use of refinery waivers. However, they may simply not go far enough in the eyes of farmers. (Reuters) On this point, Biofuel Digest notes that “anything short of full reallocation of the 4 billion gallons of biofuel demand destroyed, in addition to significant growth for the blending of renewable fuels … [as well as] stepped up investment in second generation renewable fuels will continue to leave farm county in economic distress.” (Biofuels Digest)
One issue with this is that with greater linkage of the agriculture sector to biofuels, this means that the sector is also more susceptible to fluctuating energy prices. (Bloomberg) This means that biofuel or rural energy-related policies could end up having wider impacts or effects than intended.
In summary, both Biden and Trump propose a number of different policies to assist the agricultural and rural sector, with Trump proposing more detailed policies in many areas. Biden’s primary strength is in the area of biofuels and sustainability in agriculture. While ethanol is extremely important to corn growers, other growers (wheat, tree fruit, etc.) may not find this as important. Trump’s policies are more clear-cut but may have more short-term negative impacts than positives.