U.S. farmers face fresh shutdown challenges

American producers, such as this one harvesting soybeans last fall, are already suffering from the fallout of a trade war between their country and China.  | REUTERS/Charles Mostoller photo

Loans and aid dry up as dispute over border wall shuts down parts of government, including the agriculture department

CHICAGO, Ill. (Reuters) — American farmers, already battered by the United States-China trade war, are facing increasing anxiety as the partial government shutdown continues, leaving crucial aid and loan payments in limbo.

The shutdown has blocked assistance for many farmers, who at this time of year apply for federal loans as they pay bills due from the previous year and begin budgeting for next season’s planting. It is also affecting aid payments promised to allay the effects of the trade war.

The timing is particularly bad for U.S. farmers, who are already suffering the fallout from the trade war’s raised tariffs, which have sharply reduced soybean exports, especially to China.

“It’s just bad news on top of everything right now,” said Brian Duncan, whose family farms corn and soybeans and raises hogs in northwestern Illinois.

The partial shutdown was triggered last month by U.S. President Donald Trump’s demand for US$5 billion to fund a U.S.-Mexico border wall. Democrats now controlling the House of Representatives have vowed to fund the government through legislation, but Trump has insisted that any measure to fully reopen the government include wall money.

Pressure on Trump and lawmakers to end the partial shutdown is growing from the agricultural sector. Many of the nation’s 3.2 million farmers and ranchers are Republicans and have been steadfastly loyal to the president. But some farmers have warned their support for a Trump campaign in 2020 is not guaranteed if the farm economy worsens and trade disputes continue to threaten demand for U.S. crops.

About a quarter of the federal government, or 800,000 workers, including some from the U.S. Department of Agriculture, are off the job.

The USDA’s Farm Service Agency managers and supervisors were instructed to cancel all previously arranged loan closings when the shutdown started, according to the agency’s shutdown plan posted online.

Commodity traders and farmers are also growing nervous that the USDA will also push back or possibly cancel a slew of global supply and demand grain reports set for release on Jan. 11. The data is watched by farmers when making their planting plans.

U.S. grain farmers have been increasingly turning to the FSA for loan assistance as they struggle with low commodity prices and trade issues. Banks, too, have relied on the agency to help guarantee the loans they are issuing to farmers, particularly for shorter-term farm operational loans.

“This is the time of year when farmers are talking to their bankers to get operational loans, and the money from the federal government is not coming in,” said Ted Seifried, vice-president of the Zaner Ag Hedge Group in Chicago, who works with farmers.

The government last year also pledged up to $12 billion in aid, much of it in direct payments to soybean, pork and dairy farmers, to offset some of the losses for crops hit by retaliatory Chinese tariffs imposed in response to Washington’s tariffs on Chinese goods.

The deadline to apply for the aid was Jan. 15, yet the FSA offices where farmers must submit their applications have been shuttered since Dec. 28.

Some farmers had been hoping to plant more corn, in the hopes that China will increase its corn imports for ethanol production. But planting corn can be more expensive than soybeans, a cost many operators cover through loans or aid payments.

For Duncan, a wet and snowy harvest season meant he was not able to finish harvesting last year’s corn until Dec. 31, making it too late for him to apply for the corn trade aid for now.

“Between the tariffs and the government shutdown, it’s adding levels of uncertainty to farming that no one wants,” said Duncan.

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