Enchantment State News

Enchantment State News

Tuesday, February 25, 2020

NM farmers, agri-business receive millions in trade war subsidies, studies reveal potential overpayments

Taxes

By John Breslin | Jan 8, 2020

Farm 1000x667

Farmers and agri-businesses in New Mexico have received more than $16 million in subsidies made available to combat the effects of the trade war with China, according to a database developed by a Washington-based advocacy organization.

The state ranked 34 of 50, with 86 percent of farms not collecting any payments under the market facilitation program, according to the database developed by EWG Resources, a group that promotes health eating and environment.

According to the organization, dairy producers received the most at $3.8 million, followed by cotton at $2.7 million and sorghum at $747,000. The figures are correct to the end of October.

Numbers are emerging as concerns are raised over whether the amount paid out from the multi-billions available far outstrips the losses suffered by farmers.

A total of $28 billion has been promised, with $19 billion paid out by the end of 2019 and the rest in 2020, according to NPR. By comparison, $10.2 billion was spent to bail out the auto industry in 2008.

Various studies of the soybean market have revealed that the U.S. Department of Agriculture estimates of losses and subsequent payment are far greater than the actual damages to farmers, according to a report by Bloomberg.

“It’s clear that the payment rates overstated the damage suffered by soybean growers,” Joseph Glauber, the USDA’s former chief economist who published a review of the research in late November, told the news agency. “Based on what the studies show, the damages were about half that.”

Soybeans were picked by researchers because it is the most obvious target of the Chinese retaliation and its producers received the most aid.

Professor Jay Lillywhite, department head at New Mexico State University's Department of Agricultural Economics, suggested those who are received payment are likely to be larger operators, if only because they have the resources to apply.

But Lillywhite added that if prices go down due to the trade war, all agricultural producers and farmers are affected.

"At some level every agricultural producer and farmer is affected by the trade war," Lillywhite told Enchantment State News.

No study has yet been carried in New Mexico to try and quantify the damage to New Mexico's agricultural economy, so it is unclear whether subsidies were greater or less than the losses, the professor added.

But he said those most affected are likely to be the producers of pecans, which rely heavily on exports, and milk through the importation to other countries of dried powdered products.

Stanley Crawford, a garlic farmer and novelist in Dixon, told Enchantment State News that his operation and those of many people he knows are too small to be affected directly by international trade as their markets are domestic.

But Crawford has a unique perspective on the trade war as he has been battling for years against the claimed dumping of garlic in the U.S. by the largest Chinese producer of the product without any penalty.

"My theory is the whole business would have been unnecessary if anti-dumping duties had actually been enforced," Crawford said of what he claims has been widespread evasion and gaming of the system.

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