In March, Congress authorized a multibillion-dollar bailout for farms suffering losses because of the coronavirus pandemic and left the Agriculture Department to work out how the money would be spent. When the program was rolled out two months later, Agriculture Secretary Sonny Perdue said its $16 billion in direct payments would be a “lifeline” for farmers of “all sizes and all … production.”
But that’s not what happened, according to an NBC News analysis of the first nearly 700,000 payments, totaling $5.6 billion, obtained through a public records request. The Coronavirus Food Assistance Program, while greatly appreciated by many farmers, has been marked by structural challenges. The preliminary data suggest that it has favored large, industrialized farms over smaller, diversified ones, provided loopholes for corporate farms and sent sizable payments to foreign-owned operations. Ultimately, many struggling farmers remain ineligible for assistance, unable to get access to any of Congress’ funds.
The uneven distribution is stark. The top 1 percent of recipients got more than 20 percent of the money, totaling $1.2 billion. The top 10 percent got over 60 percent of the pot, while the bottom 10 percent got just 0.26 percent. The top 10 percent of recipients got average payments of almost $95,000, while the bottom 10 percent averaged around $300.
Image: Sonny Perdue
Agriculture Secretary Sonny Perdue arrives in the Roosevelt Room at the White House on May 23, 2019.Jabin Botsford / The Washington Post via Getty Images
“I’m sure the money helped those larger operations tremendously,” said Lonnie Sigler, an Alabama rancher and high school agriscience teacher. “But for a person like myself that sells once every six months, it’s hard to see how it can help you all that much.”
Joseph Janzen, a professor of agricultural economics at Kansas State University, said: “It’s a constant struggle in U.S. agricultural policy. The tension between the mass of small farms and the little group of huge farms makes the idea of equality in farm payments incredibly complicated.”
Nearly 2,300 operations received more than $250,000, which was set as the payment limit for a single farm. But the rules gave corporate farms ways to get more money. For example, the Agriculture Department allows farms to get up to $750,000 if three shareholders each spent more than 400 hours working in the business. Experts also say there is no real payment limit for farms structured as “general partnerships,” because of a long-standing loophole in farm subsidy policy. That’s presumably how Titan Swine, a hog farming partnership of 20-plus independent producers in northwest Iowa, got over $2.5 million in taxpayer cash and five other farms got $1 million or more.
The government has earmarked billions to help farmers. There will be winners and losers.
“The payment limitations are supposed to help make things more fair,” said Tyler Whitley, a program manager for the Rural Advancement Foundation International. It’s “so USDA can spread money to more farmers and a couple farms don’t suck in huge amounts.”
In a statement, Titan Swine said it’s comprised of “farm families involved in the day to day operation of the company.”
“Titan Swine was formed to group assets, knowledge, and economies of scale to better compete with large corporate farms in livestock ownership,” the company said.
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It’s first come, first served; the funds that have been paid so far are just 80 percent of each farm’s maximum payment, and the rest will be released later if money remains. That’s not saying much for folks at the bottom. Almost 7,000 farms got less than $200, and nearly 200 got less than $20. The lowest payout was 7 cents.
Sigler, the Alabama rancher, got about $2,000 from the Agriculture Department, but he still stands to lose as much as $9,000 in 2020. He has lost $4,500 so far and estimates that that will double unless prices for calves recover. He hasn’t sold any because prices have been so bad that he would have been selling at a significant loss.
NBC News found over a dozen examples of bailouts that went to what appear to be foreign-owned farms, including a Swiss-owned farm in Texas, a Korean-owned farm in South Dakota and a series of Dutch-owned companies in Wisconsin. Their payments add up to over $3.6 million, an average payout above the Agriculture Department’s payment cap.
NBC News identified the farms by cross-referencing data from Agricultural Foreign Investment Disclosures, obtained via a public records request in September 2019. Some matches may be out of date, given that the Agriculture Department’s most recent records are from 2017. However, more foreign recipients could have applied under names that didn’t precisely match their foreign ownership disclosures to the Agriculture Department.
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Many of the issues aren’t new. It’s not easy to design a multibillion-dollar bailout in two months, so the Agriculture Department’s program looks a lot like another recent bailout: $28 billion to help farmers through the U.S.-China trade war. The common criticisms of the Coronavirus Food Assistance Program were inherited from the earlier program’s framework, experts say.
“If USDA had had a little more time to craft this, maybe it would have shaped up differently,” said Mike Stranz, vice president of advocacy for the National Farmers Union. “But Congress was in a hurry, and that put USDA in a difficult position with this program, having to process, understand and evaluate all of the losses that farmers were feeling in this pandemic in just two months.”
In a statement, the Agriculture Department said it had to act fast to provide relief given uncertainty and market volatility.
“The $16 billion Coronavirus Food Assistance Program (CFAP) has provided critical support to our farmers and ranchers, maintained the integrity of our food supply chain, and ensured every American continues to receive and have access to the food they need,” a department spokesperson said. “USDA acted quickly to assist America’s farmers and ranchers — of all sizes and for all market outlets — as they faced the initial fallout of COVID-19.”
Said Joseph Glauber, a senior research fellow at the International Food Policy Research Institute who is a former chief economist at the Agriculture Department: “When you have a program in response to some emergency, you want to get money out as soon as possible. But at the same time, people want accountability for those monies. They want to make sure it’s going to the right people and that somehow the amount of money going to people is commensurate with the amount of money lost, so you’re not overpaying some and underpaying others. To get all those things right is tough.”
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