A tenth of US farm operators have received more than half the money from a federal bailout designed to offset the costs of the Trump administration’s trade battles, data show.
Some use legal loopholes to collect multiples of a $125,000 cap on payments.
The government had doled out $8.5bn ahead of last Friday’s application deadline for farmers, the US department of agriculture said. The White House launched the Market Facilitation Program in September after China, Mexico and other countries fought back against US tariffs by raising duties on American farm goods, depressing their price.
The payments reflect the farm sector’s political clout in Washington. No other US industry has received direct payments to relieve losses caused by tariffs.
The department is now working on a second direct payment scheme worth as much as $20bn after trade talks between the US and China fell apart, agriculture secretary Sonny Perdue said last week.
Between September and mid-April, $4.5bn of MFP payments went to 10 per cent of recipients, according to records the Financial Times obtained under the US Freedom of Information Act.
The government limited payments to $125,000 per person or legal entity in each of three commodity categories. Farmers were also ineligible if their adjusted gross income topped $900,000.
The records showed that more than 3,000 farm businesses got paid in excess of $125,000 within a single category, however. More than 100 received at least $500,000 and a handful collected almost $1m.
Three farm businesses that share a Charleston, Missouri address — DeLine Farms Partnership, DeLine Farms North and DeLine Farms South — were collectively paid $2.8m between September and April based on their soyabean, corn and cotton production, the data showed.
Farmer Donny DeLine of Charleston was described as a “big time operator” in 2010 by Farm Journal. In 2012 another industry publication said he farmed 35,000 acres.
A bar chart showing top producers receive biggest government cheques
More recently, DeLine Farms operated in six US states, according to a Facebook post by Missouri congressman Jason Smith, who after a visit there called it “a great example of the incredible efficiency of today’s farmers”. Calls to a phone number listed at the DeLine address were not returned.
The USDA said an individual farm operator could receive more than $125,000 per commodity category if it was structured as a general partnership. In this case, each member of the partnership deemed to be “actively engaged” in farming is eligible to receive up to $125,000. The three commodity categories were livestock and dairy, speciality crops and field crops such as soyabeans and corn.
Jonathan Coppess, a former administrator of the USDA’s Farm Service Agency, said the use of general partnerships to increase government payments has been controversial. Lawmakers have made repeated efforts to cut down what are known in policy circles as “Mississippi Christmas trees” — byzantine business structures designed to maximise subsidies.
“Some farmers create complicated entities in order to receive more payments than they could as an individual,” Mr Coppess said. “It is frankly difficult to justify that one type of entity, such as a general partnership, can increase the total amount of payments through loopholes in the rules.
“Unfortunately, it is a black eye for any of these type of payments that a small group of people try to take advantage of the rules and get around the limits in order to receive more than they’re supposed to,” he said.
A bar chart showing MFP soyabean payments in leading farm states
Due West Farm of Glendora, Mississippi, received $840,624 in MFP payments for cotton, corn and soyabean as of mid-April, the data showed.
Farmer Mike Sturdivant said the farm, which dates back to 1857, was jointly owned by him, his four siblings and other family members, and several received USDA payments that complied with the cap. At the end of last year, Due West Farm was broken into five different entities as it struggled with low crop prices, he said.
Even with government payments, Mr Sturdivant said it was difficult to turn a profit.
“The numbers don’t work very well,” he said. “Beans, corn, take your pick, they’ve all taken a tumble.”
The MFP scheme is in addition to regular farm subsidies. A recent study by the Government Accountability Office found that of the 50 farming operations receiving the highest payments in 2015, 49 were general partnerships.
Scott Irwin, an agricultural economist at the University of Illinois, said MFP differed from the other farm programmes because payments were based entirely on production in 2018, rather than multiple years.
This boosted farms where good weather enabled the best crops and reduced payments in places where yields — and revenues — would be lower. Farmers in Illinois received more than $1bn in MFP soyabean payments, the most of any state, after they enjoyed record average yields of 65 bushels an acre, USDA data showed.
A bar chart showing top bailout recipients
“This program in 2018 rewarded the lucky on weather,” Prof Irwin said.
The fact that a majority of the cash flowed to a tenth of US farm operators attests to consolidation in the rural economy. Farms of 1,000 acres or more in size accounted for half the value of agricultural production, according to a 2017 census of agriculture released last month.
US officials said earlier this year they were not planning more MFP-type payments. “These were done last year and justified because farmers had done their planting. They had seeds in the ground. They were caught unawares of the retaliatory tariffs,” Mr Perdue said in February.
The position has changed after grain markets scraped 10-year lows on fears Beijing would indefinitely maintain tariffs on soyabeans, sorghum, corn, dairy, pork and other US products.
Mr Perdue told reporters last week the USDA was developing a new aid package likely to contain more farmer payments and cost about $15bn-$20bn, with funds coming from the Commodity Credit Corporation arm of the USDA.
To be considered eligible for payment, members of a partnership must make “significant” contributions to the business including “active personal labour” or “active personal management”. The latter requires at least 500 hours of work annually or 25 per cent of the time needed to run a farm.
The payments data indicate that some farm operators work far from fields. Nearly 10,000 individuals and businesses in the largest 50 US cities were paid a total of $33m under the MFP programme, including one corporation with an address on Manhattan’s Park Avenue.
