Texas A&M publishes trade aid analysis
Texas A&M University has published its analysis of the Trump administration’s trade aid program. The report was written by Bart Fischer, a former House Agriculture Committee Republican chief economist, Joe Outlaw, Marc Raulston and Brian Herbs.
In an introduction, the authors said, “There is no denying that the aid package — particularly the Market Facilitation Program (MFP) — has had a significant impact on farm income in the United States. Across all of the Agricultural & Food Policy Center’s 63 representative crop farms, MFP 1.0 (2018) and 2.0 (2019) protected $16.4 million in net worth over the 2018-2020 study period. Furthermore, under baseline conditions (i.e. no MFP), 35 of the 63 farms had a greater than 50% probability of negative ending cash at the end of 2020 (i.e., needing to borrow on operating notes to finance shortfalls). With MFP in place, that number was cut by 34.3% (23 farms facing significant threat of shortfall).
“Some have argued that MFP 2.0 was biased toward Southern states. While there was significant variability in county payment rates for MFP 2.0, most of that variability is easily explained by the underlying damage assessments and the distribution of planted acres in the respective counties. And, despite the fact that the highest county payment rates were predominantly in counties with cotton production, almost 70% of the assistance under MFP 2.0 went to Midwestern states.
“While we find little validity to the argument of regional inequity, there certainly were disparities between neighboring counties. These differences were particularly disruptive for producers of crops relatively more impacted by retaliatory tariffs who happened to produce in counties with lower payment rates. Finally, we find that MFP 1.0 and 2.0 have also had a greater than $41 billion impact on the broader rural economy.”
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