In January, the United States and China signed “phase one” of a trade deal that signaled a partial truce in the trade war between the world’s two largest economies. As part of the package, China agreed to increase purchases of American products and services by at least $200 billion over the next two years, including $32 billion in agricultural spending.
For farmers across the US, that was welcome news. Farmers took a hit during the trade war, as China drastically cut purchases of American agricultural products, particularly dairy and soybeans, in retaliation for Trump administration tariffs. To compensate, US federal farm subsidies jumped to $16 billion in 2019, the highest level in 14 years. That came on top of the previous year’s $12 billion aid package, for a grand total of $28 billion in what effectively amounts to a trade-related bailout of the agricultural industry.
As NPR reports, some of that money came from long-running programs established in the Farm Bill, but other payments were unprecedented, such as direct subsidies to farmers paid in the form of checks made out by the USDA. “‘Trump money’ is what we call it,” Missouri soybean farmer Robert Henry told NPR. According to USDA data, trade compensation accounts for the greatest share of farm payment increases since 2017.
But though the two-year subsidies amount to more than the cost of the initial automobile industry bailout, in 2008—a program that was hotly debated in Congress; there were later bailouts under the Obama administration—there was little discussion of the agricultural bailout. It didn’t go through Congress; rather, the USDA decided that an old program, the Commodity Credit Corp., already gave it authority to spend the money, a move of questionable legality. And according to several independent studies, the bailout overpaid farmers for the actual harm they suffered from the trade war. The payments were based on production, rather than losses: the larger the farm, the bigger the payments. According to an NPR analysis of payments made through July 2019, 100,000 individuals collected more than 70 percent of the money.
Bankruptcies on the Rise
Despite all that cash, family farm bankruptcies in the US hit an eight-year high in 2019, according to data released last week by the federal court system. The Farm Bureau’s market intel report broke down the grisly numbers:
During the 2019 calendar year, there were 595 Chapter 12 family farm bankruptcies, up nearly 100 filings from 2018 and the highest level since 2011’s 637 Chapter 12 filings. Given that there are slightly more than 2 million farms in the US, the 2019 bankruptcy data reveals a bankruptcy rate of approximately 2.95 bankruptcies per 10,000 farms, slightly below the rate of 2.99 filings per 10,000 farms in 2011.
The midwest, southeastern, and western United States were hit the hardest. In New York, 20 farms declared bankruptcy, four fewer than the previous year. From 2010-19, New York lost 202 farms, a figure only surpassed by California, Wisconsin, Georgia, Florida, and Texas.
But the picture for New York isn’t entirely bad. The USDA census, released every five years, allows us to get more granular with state- and county-level data. Comparing the 2017 and 2012 reports reveals that:
- Columbia County added 24 farms and five percent more farmland. In 2017, the average farm earned $170,718, up 27 percent from 2012.
- Dutchess County lost 58 farms and nine percent of its farmland. The average farm earned about $70,817, down 2 percent.
- Putnam County added 17 farms and 21 percent more farmland. The average farm earned $35,342, down 22 percent.
- Greene County lost 67 farms and 18.5 percent of its farmland. The average farm earned $95,927, up 17 percent.
- Ulster County lost 65 farms and 17 percent of its farmland. The average farm earned $129,088, up 12 percent.
- Orange County lost 37 farms and nearly eight percent of its farmland. The average farm earned $141,571, down 7.5 percent.
- Sullivan County added 45 farms and 11 percent more farmland. The average farm earned $77,550, down 8 percent.
As the numbers show, even some local counties that added farms and acreage saw declining revenues. Most of the losses were among dairy farms, which fell by 14 percent. The number of farms growing vegetables and fruit remained constant. And of course, the data from the USDA agricultural census predate the trade war with China, which slapped retaliatory tariffs on many American goods, including dairy products. Last August, New York Farm Bureau public affairs manager Steve Ammerman told Spectrum News that the tariffs had probably cost New York dairy farmers $150 million.
Precarity is nothing new for farmers, however, and farmers in New York—which has a diverse agricultural sector, a huge non-farming economy, and forward-thinking programs like the farm brewery and cidery licenses—are better positioned than many farmers elsewhere in the country.
Marijuana legalization in the state represents another opportunity—if small farmers are given a chance to compete with the large-scale “cannacorporations” that have dominated the markets in other states with legal weed. The Marihuana Regulation and Taxation Act will be back on the legislative calendar this year, after coming close to passing last year.
Groups like the New York Small Farm Alliance of Cannabis Growers and Supporters (NY Small FarmA) are pushing for a robust, local craft cannabis industry, much like the craft beer, wine, and cider industries that are thriving in the state. NY Small FarmA wants any legalization to require that at least 50 percent of the state’s cannabis be supplied by small farmers using regenerative practices.
“New York has the opportunity to be the state that leads the way, recognizing its responsibility not merely to regulate the economic potential of this plant but to model a regenerative form of agriculture that eschews fossil fuels in the form of synthetic pesticides or energy in favor of the sun and other renewable sources, while prioritizing people’s need over corporate greed,” wrote NY Small FarmA president Andi Novick in a recent statement that came in response to Governor Cuomo’s 2020 budget, under which Novick claims cannabis will almost exclusively be grown industrially. “Looking to our farming communities and to small local businesses to produce the maximum amount of cannabis for New York is an opportunity to change both the business culture as well as the agriculture.”