Deep cuts to agriculture programs in President Donald Trump’s budget proposal would have a devastating impact on U.S. wheat exports at a time when the country faces historic competition from overseas producers, according to wheat experts in Washington and Idaho.
The Trump administration has proposed slashing conservation programs, food aid, crop insurance and trade programs that help sell American wheat to foreign buyers.
Michelle Hennings, executive director of the Washington Association of Wheat Growers based in Ritzville, said those cuts would be especially painful for many farmers on the Palouse, who have struggled to turn a profit amid a global wheat surplus.
Washington exports more than 80 percent of the wheat it produces, while the country as a whole exports about 50 percent. Hennings said many Washington growers need about $6 per bushel to break even, yet prices have been hovering below $5 for months.
“It’s so important to trade our wheat,” she said, “because otherwise we sit on it and the price goes down.”
Trump’s budget stands little chance of passing Congress intact, but agriculture groups are gearing up for a major lobbying effort on Capitol Hill ahead of negotiations on a farm bill that’s set to expire in 2018. The farm bill generally identifies which programs should receive funding during the budgeting process.
Farmers say they took a major financial hit when lawmakers approved the last farm bill in 2014.
“It’s a very challenging time for grain growers,” said Randy Fortenbery, a professor of agricultural economics at Washington State University.
Here’s a look at some of the agriculture programs the Trump administration would put on the chopping block.
Trump’s budget would completely defund the Market Access Program and the Foreign Market Development Program, which are overseen by the U.S. Department of Agriculture.
The programs, created in 2002, provide funding to organizations like U.S. Wheat Associates, which has offices in 15 foreign countries. Specialists in those offices work with potential buyers and develop flour blends that suit their products, including crackers, sponge cakes and pasta.
“We’ve covered the globe,” said Glen Squires, executive director of the Washington Grain Commission based in Spokane. “Those offices are helping to promote wheat sales in those countries.”
Squires said U.S. wheat growers need help finding buyers at a time when a cluster of countries near the Black Sea – Russia, Ukraine and Kazakhstan – are outpacing American production. Eliminating the programs, he said, “would be devastating to the wheat industry in terms of marketing and market development.”
The programs this year cost just over $200 million, roughly 0.005 percent of the $4 trillion federal budget for fiscal 2017. And studies commissioned by the USDA have found the programs offer substantial returns – between $24 and $35 for every taxpayer dollar spent.
“There is overwhelming evidence that export promotion has a positive and statistically significant impact on increasing demand for U.S. exports,” a group of economists from Oregon State University and Texas A&M wrote in a study published in September.
Some agriculture groups, including the Washington Association of Wheat Growers, are urging Congress to double funding for the programs in the next farm bill. Squires said agricultural products are among relatively few U.S. exports that help reduce the country’s trade deficit.
Blaine Jacobson, executive director of the Idaho Wheat Commission, suspects the Trump administration will either back away from its request to eliminate funding for the programs, or Congress will simply deny that request.
“Eventually they’ll come around and realize all the good these programs do,” he said.
The Trump administration has proposed slashing $29 billion from crop insurance and denying subsidies to farms with annual incomes of $500,000 or more. President Barack Obama tried to impose the same cap in 2009, but Congress shot it down. The proposed eligibility threshold is based on income, not profit.
Hennings, of the Washington Association of Wheat Growers, said crop insurance would be cost-prohibitive without help from the government. She said about 90 percent of the state’s growers rely on that coverage, and the proposal out of D.C. fails to account for economic realities in wheat country.
“Farmers need a safety net,” she said. “Crop insurance is our risk management tool to make sure that we get at least some returns out of the crop.”
Trump’s budget also includes a so-called “means test” for insurance eligibility and a $40,000 cap on premium discounts that each farmer may receive. The agriculture industry also strongly opposes those measures and says they would leave many farmers without coverage.
“There’s a misconception on what these programs are actually used for,” Hennings said. “We pay out of pocket, too. It’s not just the government subsidizing us.”
Conservation, food aid
Hennings said Trump’s budget would make it harder to enroll in programs like the USDA’s Conservation Stewardship Program and the Environmental Quality Incentives Program, which pay farmers to engage in conserving their own land. The budget would slash about $6 billion from those programs.
Agriculture groups, including the National Farmers Union, also oppose Trump’s proposed cuts to the Supplemental Nutrition Assistance Program, or SNAP; the USDA’s operating budget; and Medicaid, which the union says would disproportionately affect health care for rural residents.
“The president’s proposed budget is an assault on the programs and personnel that provide vital services, research and a safety net to America’s family farmers, rural residents and consumers,” the union said in a news release.
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