One person described it as a bridge. Another person saw it as a Band-Aid.
Whatever the metaphor, they agreed that Minnesota farmers need a bailout package to weather the ongoing U.S.-China trade war.
A “bridge payment” until markets open up would be a welcome, temporary step, said Dan Glessing, a dairy farmer who serves as president of the Minnesota Farm Bureau Federation.
“It would be appreciated, but it’s not a solution,” he said.
At an event with Glessing and other agriculture industry leaders last week in Faribault, Gov. Tim Walz said Band-Aids in the form of bailouts can be useful.
“When you need a Band-Aid, use the Band-Aid,” he said. “If there’s money to be moved right now to help out, let it help get us through this crisis, but it is not a fix in the long term.”
Related: Solutions prove elusive for Minnesota soybean farmers caught in trade war with China
On Tuesday, President Donald Trump began making good on his promise to help, directing the U.S. Department of Agriculture to reopen USDA offices that were closed as a result of the federal government’s shutdown and directing them to distribute more than $3 billion in farm aid. The Trump administration coupled that help with an attack on Democrats.
“President Trump will not let the radical left Democrat shutdown impact critical USDA services while harvest is underway across the country,” Agriculture Secretary Brooke Rollins wrote on X.
The money comes from a fund Trump tapped during his first term, when he imposed tariffs on China that provoked Beijing to impose retaliatory duties on soybeans, corn, wheat and other American imports.
So, the first Trump administration fashioned a rescue package out of money from the U.S. Department of Agriculture’s Commodity Credit Corporation (CCC) fund that gives U.S. farmers hardship payments. In all, the CCC paid out $28 billion to help farmers impacted by the 2018-2019 trade war.
And the total amount of losses are likely to exceed that $28 billion since the harm of Trump’s trade policies to U.S. farmers is even more severe now. Trump’s tariffs are nearly global in nature and the trade war with China has intensified. China has found new suppliers besides Brazil for soybeans and other farm products it once imported from the United States. Chief among them is Argentina.
Meanwhile, the CCC has much less money now, and while it can borrow more, there are competing demands.
Why would a farmer bailout be needed?
Persistently low crop prices and rising input costs are a bad combination.
Both are linked to the Trump administration’s policies. Tariffs impact prices on fertilizers, farm equipment and other input costs. New markets could increase demand, which could raise prices, but none come near to replacing China’s outsized soybean market. Identifying other international buyers is more about clawing back yards of lost ground an inch at a time.
“Some of the trade deals are coming, but not fast enough for what we’re producing,” Glessing said.
Farmers contend with enough uncertainty in the natural course of business. A crop’s success or failure is subject to the whims of Mother Nature. Worrying about droughts, flooding, tornados and hail comes with the territory.
Trade wars are another unpredictable variable to throw in the mix, although Trump wasn’t shy about his plans on the campaign trail.
Gary Wertish, a Renville County farmer and president of the Minnesota Farmer’s Union, has been critical of Trump’s policies. On a bailout, he said it’s a necessary move in an unnecessary trade war.
“The farmers need it, there’s no doubt, but it’s kind of been self-inflicted by the president’s policies,” he said.
Aid from the federal government is an imperative, said Darin Johnson, president of the Minnesota Soybean Growers Association. His preference, however, would be to restore markets that farmers spent years or even decades establishing.
“We want free trade and to be able to just get a fair price for the product we’re growing, is how we want to do it,” he said.
Grain market economist Ed Usset thinks a large bailout looks likely to happen once the shutdown is over.
“If I’m a producer, I’m hoping they are as generous this time around as they were the first time around,” said Usset, who works at the University of Minnesota’s Center for Farm Financial Management.
How would the Trump administration pay for a bailout?
While Trump has begun to keep his promise to help farmers, more aid is likely needed. Three sources of that aid are under consideration by his administration.
The Commodity Credit Corporation could be tapped again. But there are a few problems. The CCC funds programs Congress has authorized by law, including many but not all parts of the farm bill. Before the “One Big Beautiful Bill Act” was passed, these programs cost about $15 billion a year.
But the budget bill expanded those programs and boosted their cost. They include Agriculture Risk Coverage, Price Loss Coverage and conservation programs. So, while the fund can borrow up to $30 billion from the U.S. Treasury, it may not have enough money to fully compensate farmers for their losses.
Trump has also mentioned using the tariff revenue collected by the U.S. Treasury to bail out U.S. farmers. But Democratic lawmakers argue that Congress must authorize the use of these tariffs for that purpose and the money would be subject to House budget rules, which requires an offset through cuts to other programs or an increase in taxes.
In addition, the legality of Trump’s tariffs are under the consideration of the U.S. Supreme Court. If deemed illegal, those tariff revenues may very well need to be refunded to the exporters who paid them.
Related: Shutdown Blog: The latest on the government shutdown and its impact on Minnesota
There’s another, longstanding tariff fund that could help farmers, but this one also has drawbacks. Collected from custom duties on agricultural imports, this fund was created to aid farmers who do not receive CCC money or help from other farm programs, such as those who produce fruits, vegetables, meats, poultry and fish.
The fund also serves as an emergency fund for child nutrition programs, and is now being tapped to continue the Women, Children and Infants (WIC) program during the shutdown. It has a cap of only $350 million a year for other farm aid, which would not be nearly enough to cover the losses faced by row crop farmers and others this year.
The nation’s farmers are confident the president can piece together a bailout.
Trump’s support was strong in farm country, Usset said. America’s most farm-centric counties overwhelmingly voted for him.
“A lot of Trump’s base is out in the country,” Usset said. “The producers are by and large pro-Trump, and he’ll take care of them.”
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