Will Trump's $12B in trade aid be enough to help American farmers who are suffering from the recent tariffs?
The question of whether or not a $12-Billion aid package (read: taxpayer funded subsidies) for farmers “will be enough to help American farmers who are suffering from the recent tariffs?” ‡ can be answered with some rather simple observations on economics …Round-up illegal individuals, many of whom work in farm labor. This decreases farm productivity. If State and/or Federal agents receive too many complaints about Americans going to work in the fields ‡ that of wages, safety, etc ‡ then you have to enforce. This is regulatory. It is mandated, by law, due to our legislatures. The more people you take out of the fields (i.e. deportation of illegal immigrants, who will often work for lesser pay in harsher conditions), the more the costs of basics, such as produce, will increase (when farmers need to come into compliance with standard labor laws that those who would not usually come forward to complain about are disposed of, and you ask people to do jobs they normally wouldn’t do ‡ see the bill Kamala Harris was recently working on, which is meant to die in the US Senate, for perspective).A small bit of history. Many farmers are “conservative,” at least traditionally, they’re tight-fisted and fiscally conservative. Even in the “old-days” (before big-corporate farming), farming, in some or many instances after the Great Depression was subsidized by the US Federal Government. You also have to look at some other nuanced historical factors, such as one of the biggest agrarian disasters in modern history (i.e. The Dust Bowl), and the lessons learned from World War I, leading toward World War II (where we started significantly increasing crop productivity and longevity of basic staple and perishable crops, some of this due to huge advances in biological sciences).Simply put, looking at the history, there was a huge investiture of cash-flow into the agrarian economy, farmers were subsidized (read: money). Since this time, and since big-corporate outfit farming has consolidated a lot of things, leading into big-business lobbying for regulation, and legislation to edge-out competitors, as well as continue subsidies programs ‡ that’s what it has become about: Money.Who is going to benefit from a $12-Billion aid package? Does a small farmer, struggling with wages and labor conditions have the time to be concerned with doing more paperwork? (Or, waiting on a smaller government footprint to never get around to reviewing that paperwork if there’s time to even fill it out?) Or, will a major corporate outfit who can afford the lawyers to do the paperwork for contracts and exports also find the time and expertise (and free cash flow) to apply for grants, and subsidies under this aid package.In the mean time, lets‡ take for example, reading about dead meat stacking-up due to the newly imposed trade war and tariffs ‡ if you can’t make money exporting the product, you could sell it locally or domestically, if the market allows (i.e. other considerations, such as transportation, etc). You might make the same or less margin (or, maybe greater) by flooding the local, regional or national market with excess product, thus driving down the price-to-consumer. (We the people, pay less ‡ but only if that stock is released, rather than letting it go to waste, and if the distribution capability and capacity is available, etc.)But, what really happens behind the scenes is that product under contract is listed as unavailable due to export/import tariffs, and, that “stock” sits in a warehouse until it spoils. And then it is a write-off. It’s also likely something that can be reimbursed under an “aid” package. So, what do you do if you’re fiscally smart and conservative: You don’t flood the market, you pay the minimal disposal costs (instead of increased distribution costs), and sit on the product until it spoils (because it’s under contract, but, the contract won’t allow for making a profit, so, product is unavailable to the contracted market), while doing the paper-work ahead of time.You’ve just minted yourself a dime (a write-off, waste, further subsidized and reimbursed).If you think this is somehow negative or cynical ‡ it’s not. It’s just business. This is the way big-business farming works.To answer the question: Yes, it should be “enough,” but it is not, and, it is never enough given all of the nuanced factors that come into play. Who cares about the tariffs, there are other, additional considerations before Trump’s Trade War even started being played out.And, bottom line, even subsidizing farmers, the buck is passed to the tax payer, and someone has to pay for the federal government to prthe subsidies. (Instead of product which could be distributed and used domestically, driving prices-to-consumer down.) It’s a rigged gig.Some facts for readers:I have an uncle who owns a family farm (generational, being passed to his children).I’m familiar with negotiating contracts and supply in the agricultural industry.I’ve studied history and economics (in the above, respective domains).Questions like this rarely have good, direct, or simple answers. (Because while $12-Billion sounds like a lot, it’s really just a drop in the bucket, and only big-players will benefit.)