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Comment: Direct payments to U.S. farmers may dry up under Biden administration

The president-elect seems lukewarm at best towards strings-free payments to farmers

Reuters – U.S. farmers will likely see a familiar face at the helm of the Department of Agriculture come January, but the lofty government assistance programs they have got used to could be a thing of the past.

President-elect Joe Biden has nominated Tom Vilsack as agriculture secretary, a move seen as safe but welcoming for most Midwestern farmers. Vilsack served as USDA secretary for eight years in the Obama administration.

But U.S. agriculture has changed a lot in the last four years, particularly when it comes to government aid for farmers, which shattered records in 2020.

Direct government payments are projected to account for a whopping 39 per cent of U.S. net farm income in 2020, the highest share since 2001. It is uncertain what Biden’s plans may be for these payments, but many industry insiders believe they will be substantially lower, especially given the one-off nature of this year’s sum.

However, farmers probably did not need those payments in 2020 as much as in the previous year or two, and higher commodity prices should promote some optimism for 2021 even in lieu of extra assistance.

Biden has hinted at disapproval of the recent farmer aid packages. During the October debate between Biden and President Donald Trump, the latter said: “I just gave US$28 billion to our farmers,” claiming the money came from China. Biden interrupted, “taxpayers’ money.”

One of Biden’s rumoured finalists for the secretary position, former U.S. senator Heidi Heitkamp of North Dakota, has been very critical of Trump’s trade policies, suggesting a Biden administration could change direction on trade with China.

That was somewhat reinforced on Dec. 9, as Biden selected Katherine Tai, the House Ways and Means Committee’s chief trade lawyer, to serve as U.S. trade representative. Tai in August called for a different approach to China, saying the United States needed a better offence than tariffs.

But Biden recently told the New York Times he planned to keep the Phase 1 trade deal, at least at first, along with tariffs on Chinese goods. He said his policies would target China’s “abusive practices” such as stealing intellectual property.

While Biden may not be a proponent of handing out payments to farmers in the same manner as Trump, part of his plan is to create additional revenue sources for farmers. That is largely based on incentivizing farmers to increase environmentally friendly practices, such as carbon sequestration.

Karen Braun is a Reuters market analyst. The views expressed here are her own.

About the author


Karen Braun is a Reuters market analyst based in Chicago. The views in this column are her own.



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