The $120 Billion In Programs To Offset Farm Income Crisis

Views:2     Author:Site Editor     Publish Time: 2018-08-07      Origin:Site

The USDA's press release revealed plans to authorize up to $12 billion in programs to offset agriculture shade net trade war impacts. More specifically, the USDA aid was in line with the estimated $11 billion impacts of the unjustified retaliatory tariffs on U.S. agricultural goods,but lacked substance and details about how funding would impact farmers’ bottom-line. The USDA did provide insight into the trade war's impact on the overall farm economy. 


The USDA's February estimate of $59.5 billion in net farm income for 2018. For several reasons, that estimate was concerning. 


First, it was lower than in 2016 and 2017, which were not good farm income years.  Second, it was less than half of farm income highs in 2013. Third, it was well below the long-run average (inflation-adjusted net farm income) of $81 billion. However, we noted some comfort could be taken in 1) the current estimate being above levels sustained during the Farm Financial Crisis of the 1980s and 2) the fact that the rate of decline had significantly slowed since 2016.


With that starting point, additional concerns about the farm anti bird net economy mounted as the possibility of a trade war, tariffs, and tumbling commodity prices became reality. With the USDA's estimate of an $11 billion hit to the farm economy, perspective on the situation can be provided.


To do this, we simply took the USDA's net farm income estimate in February of $59.5 billion and subtracted the USDA's stated trade war impact of $11 billion. Without accounting for adjustments in producer spending – which would have been limited given the tariffs went into effect in July – one could reasonably consider the impacts on net farm income. Specifically, net farm income in 2018 could have fallen to the neighborhood of $48.5 billion, before the trade aid. How does this compare historically?


When looking at the USDA's net farm incomes estimates since 1929 in inflation-adjusted dollars (2018), the $48.5 billion estimate of trade war net farm income puts into perspective how dire the situation could have become.


At $48.5 billion, conditions would have been in line with those during the Farm Financial Crisis of the 1980s. Specifically, farm bee net income would've been the lowest since sine 1983 ($30.7 billion) and 1980 ($41.9 billion). In 90 years of data, $48.5 billion would've been the seventh lowest value. In short, the trade war on its own could've pushed net farm income, and the broader farm economy, to crisis levels.


About Us
Sugrand is a leading manufacturer of agricultural and construction plastic nets in China. sugrand has advanced technology and intellectual property. sugrand agricultural plastic nets account for more than 20% of the global market.
Contact Us
​​​​​​​​​​​​​​15 Floor,B Tower,Jin Zhong Huan Mansion,Hefei,China
0086-551-62531962
      0086 156 0560 7108
Hefei Grand Nets Co., Ltd