As the Trump Administration announced new tariffs on major agriculture trading partners, media reports last week indicate that USDA Agriculture Secretary Brooke Rollins will try to cushion the blow to farmers by reinstating a controversial trade aid program originally established during the first Trump administration. Diminished exports can mean a glut of agriculture commodities and a drop in prices for farm products like corn, soy, meat, poultry and dairy. As Aaron Lehman of Iowa Farmers Union told the Financial Times, “Our domestic markets aren’t prepared to pick up the slack and that means lower prices for what we grow.”
The Market Facilitation Program (MFP) was established during the first Trump administration to provide farmers compensation for lost income when China applied retaliatory tariffs against exports of U.S. farm commodities like soybeans, beef and pork. In March of this year, China once again responded to new Trump administration tariffs by targeting U.S. agricultural goods with 15% retaliatory tariffs on chicken, wheat, corn and cotton, and 10% tariffs on sorghum, soybeans, pork, beef and dairy products. Other retaliatory tariffs from major trading partners are expected in response to the latest round of Trump tariffs.
The original Market Facilitation Program was poorly designed and unequally implemented
The original MFP was highly criticized for picking winners and losers by favoring larger farms, preferencing commodity crops over other farm products, and prioritizing Southern states over the rest of the country. The MFP was seen by many as a political payoff to farmers and duplicative of existing farm programs that pay farmers when prices drop. The program was developed entirely by the Agriculture Secretary and funded through USDA’s discretionary spending at the Commodity Credit Corporation, with no input from Congress.
The original MFP began with $12 billion for farmers in 2018, and grew by an additional $16 billion as the trade war with China continued in 2019. In 2019, USDA raised the maximum level farmers could receive from $125,000 per crop in 2018 to $250,000. The rules to qualify were loose, allowing even farmers convicted of fraud to access aid. Global agribusiness firms also cashed in. The Brazilian-based meat giant JBS took in an estimated $67 million through government purchases as part of the MFP.
A 2020 General Accountability Office (GAO) report on the 2019 MFP found that payments varied widely by commodity. Calculated as percentage of USDA’s projected price in a non-tariff alternative scenario, payments for sorghum were equal to 56% of the projected price, while dairy was reimbursed at only 1% of the projected price. Average payments varied by state, with farms in Georgia (home of then Agriculture Secretary Sonny Perdue) receiving an average of $42,000 each, while Rhode Island received just $2,000 per farm. Payments for commodity crops made up 94% of MFP payments to farmers, at an average of $119 an acre to farmers in Georgia and $15 an acre to farmers in Maine, Utah, Wyoming, Montana and Alaska. Specialty crop producers received only around 2% of MFP payments in 2019, and dairy and hogs around 4%. Out of hundreds of specialty crops grown in the United States, only eight crops received direct assistance. The payouts favored the largest operations, with the top 25 recipients receiving a total of $37 million in 2019. A separate analysis by the Environmental Working Group found that the top 10% of recipients received 58% of the farmer-focused dollars under the MFP.
A follow-up GAO report in 2021 found more problems with the program: USDA had few quality control measures in place; the Department’s methodology over-estimated the harm of tariffs to 14 of 29 commodity crops; the program assigned different prices in different regions for the same crop; and farmers in the South received higher payments than the rest of the country. The GAO noted that the lack of transparency in developing the MFP prevented the Department from receiving outside input on how to improve its methodology.
A third GAO report in 2022 found that historically underserved farmers — such as those belonging to socially disadvantaged groups that have been subject to racial, ethnic or gender prejudice — received only $818.9 million collectively (3.6% of the program’s total output) in MFP payments.
Decades of export-focused farm policy has weakened domestic food production, making the U.S. agriculture system vulnerable to trade disruptions
USDA estimated a loss of $27 billion in agricultural exports tied to the retaliatory tariffs in 2018 and 2019. But the damage runs deeper than short-term losses, as the U.S.’s reputation as a reliable trading partner also took a hit. China has moved to diversify its agriculture imports to be less reliant on the U.S., even as the U.S. is falling behind Brazil as an export leader in commodity crop exports such as soybeans and corn.
This loss of export markets is particularly harmful because the promise of export growth is cooked into the U.S. Farm Bill and trade agreements. This vulnerability is why other countries target U.S. farm products in their retaliatory measures. The Farm Bill encourages farmers to grow particular crops (i.e., corn, soy, wheat, cotton, rice) for global markets through programs that support farmers when prices drop or weather disasters hit, provide government-backed loans when private lenders balk, and focus research and extension services on commodity crop production. An underlying assumption of Farm Bills for decades has been that farmers will over-produce commodity crops for the domestic market, leaving the excess for expanding exports. The Farm Bill also assumes that in some years, prices for farmers will drop below the cost of production, hence commodity program payments designed to kick in when prices drop. This low price, export focus is the foundation for many Farm Bill programs and a series of U.S. free trade deals seeking to pry open markets in countries around the world, often through lowering tariffs on agriculture imports.
The export focus in the Farm Bill and free trade deals has worked as intended for big grain, meat and biofuel companies, driving a trend toward fewer, but larger commodity crop, meat and dairy farms. But another outcome has raised eyebrows. Despite being home to some of the world’s most fertile farmland, the U.S. remarkably has a multi-year agricultural trade deficit. As the country produces massive amounts of commodity crops, used for exports, biofuels, animal feed and processed foods, it now relies more and more on imports of many of the foods people actually eat, particularly grains, fruits and vegetables.
While a new MFP could put a band-aid on low prices and lost export markets, it works at cross purposes with other Trump administration actions that hurt farmers growing for local, U.S. markets. In March, the Trump administration ended funding for local food infrastructure grants, funding for food banks to purchase from farmers and froze funds for farmers engaging in climate-friendly practices that could diversify cropping systems. The Trump administration has threatened the deportation of much of the U.S. food system workforce, from fields to processing plants, which relies on largely immigrant labor. Finally, the Trump administration has added a 10% tariff to potash fertilizer imports from Canada, making farming more expensive. To recap, Trump is undermining export markets, weakening the workforce, increasing costs and ending programs that support markets for local food and climate-friendly farming. And hoping the MFP fixes all that.
The U.S. is missing leadership on badly needed farm policy reform
The missing ingredient in this debate is Congress, which is supposed to lead on farm policy. Unable to pass a Farm Bill for two years now, Republicans who chair the House and Senate Agriculture committees have largely sat on their hands as Rollins slashed programs with Congressionally appropriated funding and the “Department of Government Efficiency” (DOGE) ended the leases of more than 100 USDA offices around the country, likely violating the law. Congress could conduct strong oversight of any new MFP, ensuring transparency, rigorous methodologies and that funding is appropriately targeted to those most affected. But the bigger role for Congress is in reforming the Farm Bill in response to the Trump administration’s actions that will likely shrink exports. Such reforms would better manage and diversify the production of commodity crops, and provide more support for farmers growing foods that people eat. It would require challenging the excess market power of major global players that dominate and control U.S. agriculture production, and reconfiguring trade policies to ensure farmers and local suppliers (in the U.S. and other countries) aren’t undercut by cheap imports. And of course, it would involve an acknowledgement of climate risk to the food system and the need to support greater resiliency within U.S. food production and supply chains.
Conflicting Trump administration policies, combined with a passive, ineffective Republican-controlled Congress, has put farmers and our food system at risk. Repeating mistakes with an updated MFP may cushion the blow with short-term cash for some farmers, but the long-term damage could bring a much higher cost.
