The US government shutdown could delay subsidies for farmers already ravaged by Trump's trade war

Farmer Mark Catterton drives a John Deere Harvester while harvesting soybeans during his fall harvest on October 19, 2018 in Owings, Maryland.

  • The US government shutdown threatens payments of subsidies to American farmers, according to an agricultural economist.
  • University of Illinois academic Scott Irwin said the shutdown could hamper aid payments created to protect them from President Trump’s trade war.
  • „If you’re talking about cash in the farmer’s pocket, the longer this goes on, the longer it’s going to delay that program, which is really just getting ramped up,“ Irwin told Reuters.
  • The shutdown is also likely to affect the release of agricultural data, which would show whether Chinese purchases of US crops have resumed.

The continuing US federal government shutdown could have substantial negative consequences for American farmers, many of whom are already feeling the squeeze from the ongoing trade conflict between the US and China.

President Donald Trump’s sudden reversal on a bipartisan funding extension before Christmas forced a sizeable portion — but not all — of the government to shut down last Saturday. Nine days later, no solution has been found.

According to University of Illinois agricultural economist Scott Irwin, that could be bad news for farmers hoping to receive subsidies from the federal government, which were first introduced with the aim of reducing the negative impacts of the tariffs placed on agricultural goods being sent from the US to China.

Irwin told Reuters this week that the partial shutdown of the government may lead to delays in aid payments to American farmers.

„If you’re talking about cash in the farmer’s pocket, the longer this goes on, the longer it’s going to delay that program, which is really just getting ramped up,“ Irwin told Reuters.

Read more: The government shutdown is now in day 8 — here’s how long previous government shutdowns have lasted

In August, the administration launched a $4.7 billion initial investment plan aimed at helping those farming corn, cotton, dairy, hog, sorghum, soybean, and wheat. It could expand to as much as $12 billion. 

The trade war has already had a clear negative impact on many American farmers who rely heavily on exports to China to make money.

In November it was reported that farmers in some US states are being forced into plowing their crops under — effectively burying them in their fields — because there is not enough room in storage facilities, and they can’t sell their products thanks to Chinese tariffs.

All grain depots and silos are almost full, meaning farmers have to figure out their own storage or let the crops rot.

After the summit between President Trump and Chinese leader Xi Jinping, it was agreed that China would resume purchases of some US agricultural products, including soybeans, but the continuing government shutdown is making it difficult to know whether this is happening.

Reuters reported on Friday evening that the US Department of Agriculture has said it is unlikely to publish its World Agricultural Supply and Demand Estimates (WASDE) report and reports by its National Agricultural Statistics Service if the shutdown continues.

The data is supposed to be released on January 11, and would likely make clear whether China is once again purchasing US crops.

SEE ALSO: Trump’s government shutdown has traders in the dark about a key issue in the US-China trade war

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Source: Business insider

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