WASHINGTON - Personal income for farmers fell by the most in three years in the first quarter, as losses to U.S. agriculture mount from President Donald Trump’s trade wars.
The Commerce Department on Monday cited the steep decline in farm proprietors’ income as a key factor weighing on the nation’s overall personal income growth in March, even though agricultural producers represent only about 2 percent of total employed Americans.
The report provided fresh evidence of the growing financial strain on U.S. farmers hit by the trade war, low commodity prices and a series of natural disasters, including spring floods in the Midwest. With rural voters a key part of Trump’s electoral coalition, it also underscores the political pressure to conclude the China trade war as U.S. negotiators begin another round of talks in Beijing this week.
One-time subsidy payments from the Trump administration to compensate producers for some of their trade-war losses helped prop up farm income in the previous quarter, but earnings plunged by an annualized $11.8 billion in the January to March period, according to seasonally adjusted data. On Monday, Larry Kudlow, President Trump’s top economic adviser, said the White House is prepared to do more to help agriculture.
Trump’s budget cuts would lower federal subsidies for crop insurance and small growers. The spending plan for 2020 he submitted for Congress would reduce subsidies for crop insurance premiums to 48 percent from 62 percent and limit current subsidies for growers who make less than $500,000 annually.
Even prior to the trade disputes, U.S. producers were struggling with lower commodity prices. The financial impact has spread across rural America as farmers cut back on purchases from local tractor dealers and other suppliers.
Still, the data can be volatile and factors in inventories.
A spike in December income, for example, was “likely a function of gyrations in federal subsidy payments” because of the administration’s one-time aid program to compensate farmers for trade war losses, Stephen Stanley, chief economist for Amherst Pierpont Securities, said in note to clients.
Trump has promised his trade wars will eventually be a boon for farmers.
“We’re doing trade deals that are going to get you so much business, you’re not even going to believe it,” he told a cheering crowd at American Farm Bureau Federation’s annual meeting in New Orleans in January.