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Are Farmers Made Whole by Trade Aid?

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  • Joseph P. Janzen
  • Nathan P. Hendricks

Abstract

The USDA provided roughly $23.5 billion in Market Facilitation Program payments to compensate farmers for market losses due to retaliatory tariffs imposed by China and other countries. We examine the distribution of these payments across crops, farms, and regions. Payment rates are larger than estimated price impacts of retaliatory tariffs for most commodities—the difference is especially large for cotton and sorghum. Payment rates relative to farmland cash rent or on a per‐farm basis are greatest in the South. While payments exceed the tariff‐related price impact in the short run, the program may not compensate for long‐run losses due to the trade conflict.

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  • Joseph P. Janzen & Nathan P. Hendricks, 2020. "Are Farmers Made Whole by Trade Aid?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(2), pages 205-226, June.
    • Handle: RePEc:wly:apecpp:v:42:y:2020:i:2:p:205-226
    DOI: 10.1002/aepp.13045
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    Cited by:

    1. Hendricks, Nathan P. & Murphy, Ashling M. & Morgan, Stephen & Padilla, Samantha & Key, Nigel, 2023. "Explaining the Source of Racial Disparities in Market Facilitation Program (MFP) Payments," 2023 Annual Meeting, July 23-25, Washington D.C. 337402, Agricultural and Applied Economics Association.
    2. Jaerim Choi & Sunghun Lim, 2023. "Tariffs, agricultural subsidies, and the 2020 US presidential election," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(4), pages 1149-1175, August.
    3. Amani Elobeid & Miguel Carriquiry & Jerome Dumortier & David Swenson & Dermot J. Hayes, 2021. "China‐U.S. trade dispute and its impact on global agricultural markets, the U.S. economy, and greenhouse gas emissions," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(3), pages 647-672, September.
    4. Andrew Muhammad & Stephen A. Smith & Jason H. Grant, 2022. "Can China meet its purchase obligations under the Phase One Trade Agreement?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1393-1408, September.
    5. Morgan, Stephen & Arita, Shawn & Beckman, Jayson & Ahsan, Saquib & Russell, Dylan & Jarrell, Philip & Kenner, Bart, 2022. "The Economic Impacts of Retaliatory Tariffs on U.S. Agriculture," Economic Research Report 327180, United States Department of Agriculture, Economic Research Service.
    6. Kym Anderson & Ernesto Valenzuela, 2021. "What impact are subsidies and trade barriers abroad having on Australasian and Brazilian agriculture?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(2), pages 265-290, April.
    7. Coppess, Jonathan & Janzen, Joe & Schnitkey, Gary & Paulson, Nick & Swanson, Krista & Zulauf, Carl, . "Reviewing the Recent Government Accountability Office Report on MFP 2019," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 10(180).
    8. Joseph P. Janzen & Nicholas D. Paulson & Juo‐Han Tsay, 2024. "Commodity storage and the cost of capital: Evidence from Illinois grain farms," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 526-546, March.
    9. Yu, Jisang & Villoria, Nelson B. & Hendricks, Nathan P., 2022. "The incidence of foreign market tariffs on farmland rental rates," Food Policy, Elsevier, vol. 112(C).
    10. Callahan, Scott & Ifft, Jennifer & Michaud, Clayton P., 2022. "The impact of countercyclical farm programs on agricultural land values," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322579, Agricultural and Applied Economics Association.
    11. David J. Williams & Brady E. Brewer & Jessica E. Todd, 2022. "Farm households' consumption of ad hoc program payments," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1465-1481, September.
    12. Nicholas D. Paulson & Allen M. Featherstone & Joleen C. Hadrich, 2020. "Distribution of Market Facilitation Program Payments and their Financial Impact for Illinois, Kansas, and Minnesota Farms," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(2), pages 227-244, June.
    13. Ridley, William & Devadoss, Stephen, . "Determinants of Policy Responses in the US–China Tit-for-Tat Trade War," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 49(2).
    14. Munisamy Gopinath, 2021. "Does Trade Policy Uncertainty Affect Agriculture?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 604-618, June.
    15. Paulson, Nick & Swanson, Krista & Schnitkey, Gary D., 2020. "The Impacts of MFP and CFAP on Farm Incomes and Financial Positions," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304559, Agricultural and Applied Economics Association.
    16. Joseph W. Glauber, 2021. "US Trade Aid Payments and the WTO," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 586-603, June.
    17. Jason H. Grant & Kathryn A. Boys & Chaoping Xie, 2021. "A new president in the White House: implications for Canadian agricultural trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(1), pages 45-58, March.
    18. Joseph P. Janzen & Trey Malone & K. Aleks Schaefer & Daniel P. Scheitrum, 2023. "Political returns to ad hoc farm payments?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(1), pages 555-578, March.
    19. Jason H. Grant & Shawn Arita & Charlotte Emlinger & Robert Johansson & Chaoping Xie, 2021. "Agricultural exports and retaliatory trade actions: An empirical assessment of the 2018/2019 trade conflict," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 619-640, June.
    20. Belasco, Eric J. & Smith, Vincent, 2022. "The impact of policy design on payment concentration in Ad-hoc disaster Relief: Lessons from the Market Facilitation and Coronavirus food Assistance programs," Food Policy, Elsevier, vol. 106(C).

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