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Trump farm subsidies: Farmers find ways to boost their payments

Farmers struggle with record rainfall
U.S. farmers hurt by heavy rainfall, ongoing trade war 01:55
  • The Trump administration created a program to provide financial relief for farmers hurt by its trade policies.
  • It includes a $125,000 payment cap in each of three categories of commodities: soybeans and other row crops, pork and dairy, and cherries and almonds.
  • But under the USDA's rules, one Missouri soybean farm legally collected nearly $2.8 million.

Minneapolis - When President Donald Trump's administration announced a $12 billion aid package for farmers struggling under the financial strain of his trade dispute with China, the payments were capped. But many large farming operations had no trouble finding legal ways around them, records provided to The Associated Press under the Freedom of Information Act show.

The government paid nearly $2.8 million to a Missouri soybean operation registered as three entities at the same address. More than $900,000 went to five other farm businesses, in Indiana, Illinois, Tennessee and two in Texas. Three other farming operations collected more than $800,000, and 16 others collected over $700,000.

Here's how the U.S. Department of Agriculture's Market Facilitation Program works: Farmers didn't have to prove their losses on their 2019 crops and livestock, just their production. The program sets a $125,000 cap in each of three categories of commodities: one for soybeans and other row crops, one for pork and dairy, and one for cherries and almonds.

But there are legal ways around those caps. For example, farmers can claim payments in more than one category. Individual farmers who produce both soybeans and hogs could collect up to $250,000 if their production of each was high enough.

Older, bigger farm subsidy programs also contain $125,000 caps -- with similar ways to get around them. Large-scale farming operations do that by structuring themselves as partnerships, in which each family member or "legal entity" who is "actively engaged in farming" gets their own cap.

Many relatives are exempt from the "actively engaged" requirement -- including parents, spouses, siblings and children who can each qualify for their own $125,000 cap. First cousins, nieces and nephews were added to the list in the 2018 farm bill.

Record rainfall and ongoing trade war hurting American farmers 03:02

Recipients defended the payouts, saying they didn't cover their losses from the trade war and they were legally entitled to them. Department of Agriculture rules let farms file claims for multiple family members or other partners who meet the department's definition of being "actively engaged in farming."

But U.S. Sen. Charles Grassley, an Iowa Republican who has long fought for subsidy limits, and other critics said it's the latest example of how loopholes let large farms collect far more than the supposed caps.

"This needs to end"

Grassley said in a statement to AP that some of the nation's largest farms are receiving huge subsidies "through underhanded legal tricks. They're getting richer off the backs of taxpayers while young and beginning farmers are priced out of the profession. This needs to end. The Department of Agriculture needs to re-evaluate its rules for awarding federal funds and conduct more thorough oversight of where it's funneling taxpayer dollars."

USDA officials said they believe its rules are being followed and that procedures are in place to audit recipients.

About 83 percent of the aid -- $7 billion -- under the Market Facilitation Program has gone to soybean farmers because they've suffered most under China's retaliatory tariffs. The second most-subsidized commodity under the program was cotton, nearly 6% of the total at $480 million. USDA data provided to AP through May 31 show that nearly 578,000 Market Facilitation Program applicants had received aid payments

Five states -- all top soybean producers -- accounted for nearly half the total payments: Illinois, Iowa, Minnesota, Nebraska and Indiana. The data also show that 91% of the payments, or $7.7 billion, went to counties that Mr. Trump carried in the 2016 election -- not surprising since he fared much better in rural America than in urban areas.

Multimillion-dollar payout

USDA data show the biggest beneficiary has been DeLine Farms Partnership and two similarly named partnerships registered at the same address in Charleston, Missouri, that collected nearly $2.8 million. They're led by Donald DeLine and his wife, Lisa DeLine.

Their attorney, Robert Serio, said the partnerships qualified legally and probably could have qualified for more if not for the caps. He said each partnership farms around 27,000 acres and is made up of eight or nine partners who all meet the "actively engaged" requirement.

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USDA spokesman Dave Warner said the department couldn't comment on the specifics of the DeLines' operations but that such a large claim was likely audited to ensure eligibility.

At Peterson Farms in Loretto, Kentucky, eight members of the family partnership collected a total $863,560 for crops grown on over 15,000 acres, including wheat and corn used at the nearby Maker's Mark bourbon distillery. Co-owner Bernard Peterson said it didn't make up for all their losses at a time when it was already hard to be profitable. The $1.65 per bushel aid payments for soybeans fell well short of losses he estimated at $2 to $2.50 per bushel.

"It's a big number, but there are a big number of people directly depending on the success of our operation in the community," he said.

"Stretching the limits"

The numerous ways around the caps mean millions of subsidy dollars flow to "city slickers who are stretching the limits of the law," said Scott Faber, senior vice president of government affairs at the Environmental Working Group, which has criticized federal farm subsidy programs as biased toward big producers and promoting environmentally damaging farming practices. Urban dwellers might play only a small role in an operation without ever setting foot on the farm because of the loose definitions for who qualifies, he said.

Matt Keller, a pork producer in Kenyon, Minnesota, said he appreciated the $143,820 he got. It didn't cover all his losses but helped with cash flow, he said. He reached the $125,000 cap on his hogs, and the remaining money was for his soybeans and corn.

Keller said his wife and other family members are all involved in his operation, which produces about 29,000 pigs per year. He doesn't blame the trade wars for depressed hog prices, but he said the tariffs, on top of oversupply, have made things even tougher. Said Keller: "It was kind of a relief, I guess, that we had a little support from the president and the country."

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