Michigan farmers say President Trump’s trade wars have set the stage for the extent of their financial hardships during the pandemic.
MICHIGAN — Michigan’s farmers are taking a hit during the coronavirus pandemic, as unstable markets threaten business and Chapter 12 bankruptcies are expected to climb.
Federal aid has failed to reach the state’s most hard up farmers and ranchers due to a lack of oversight and insight into their distinct needs.
But the State of Michigan is stepping in with $15 million in economic assistance for the agricultural industry and a plan to meet Michigan farmers where they are.
Family-Run Farm Operations Facing Peril
It’s a daunting time to be a farmer, and that’s particularly true for farmers in the Midwest.
“The horizons are scary,” dairy farmer Keith Weidmayer told MLive. He said that last year, his farm had started to become profitable after several years of depressed wholesale milk prices, trade war tariffs on dairy exports to China, and an impossibly wet planting season.
“Now, with this COVID-19 bug,” he said, “the prices have dropped quite a bit already.”
The impact of COVID-19 on Michigan farmers prompted the Agricultural Leaders of Michigan (ALM) in April — shortly after President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law — to write a letter to U.S. Department of Agriculture Secretary Sonny Perdue, requesting immediate aid for the U.S. dairy and pork industries.
“The dairy and pork industries are on the edge of collapse due to the continued spread of COVID-19,” wrote ALM in the letter. “It is estimated the gross industrywide loss for the dairy and pork industries will be upwards of $9 billion combined.”
ALM went on to quote Mary Kelpinski, CEO of the Michigan Pork Producers Association.
“Many pork producers, the vast majority of which are family-run farming operations, will go out of business, causing economic dislocation throughout rural America without this much-needed aid.”
“The financial situation of U.S. hog farmers is perilous, and their livelihoods are at stake. Without intervention, we are looking at a significant increase in hog farms going out of businesses, creating a dangerous risk to the food supply chain,” Kelpinski said, according to the ALM letter.
Federal Coronavirus Aid Fails to Reach Farms
Many struggling farmers were left out of initial federal aid. The $349 billion appropriated for the Paycheck Protection Program (PPP) was depleted just 14 days after enrollment opened, yet Farm Bureau reports that that quick depletion had little impact on farmers and ranchers.
Farm Bureau offers multiple reasons federal aid failed to reach Michigan farmers, including the fact that many farmers and ranchers are less prepared to work with the Small Business Association (SBA), which oversees the PPP in coordination with the Treasury Department.
Additionally, agricultural enterprises use “different tax forms; a labor force that is supported by seasonal employees, including foreign workers in the U.S. on visas; utilization of labor contractors rather than directly hired employees; and rent that is not limited simply to a single structure, but often includes land, equipment, multiple structures, etc.”
That’s just a few of the distinct business characteristics of the agriculture industry that immediately prompted questions when the PPP was launched. The extremely quick seven-day window between when the CARES Act was passed on March 27 and the launch of the PPP application made it unlikely that every possible question could be answered, says Farm Bureau, and while the SBA and USDA tried to supply answers to agriculturalists, the slow trickle of industry-specific information may have made it difficult for them to apply.
But one important element of the PPP that likely led to farmers’ and ranchers’ low signup was the slow release of guidance for self-employed and independent contractors, Farm Bureau’s market intel report suggests. The SBA began accepting applications for these small businesses April 10, but guidance related to these applications wasn’t released until April 14, less than 48 hours before funding ran out.
Agriculture groups and businesses have concrete ideas about how to improve the PPP for the industry. In an April 27 letter to congressional leaders, reports Michigan Farm News, 38 agriculture groups and businesses, including the American Farm Bureau Federation (AFBF), listed priorities for the next round of SBA loans. The list included expedited approval of applications for rural lenders, guidance for agricultural applicants, and an increase in SBA’s eligibility cap for employees, which they said is essential for family farms and agricultural processors who employ more than 500 people.
The State of Michigan Meets Farmers Where They Are
While agriculture enterprises that employ 500 or less people are eligible to apply for aid through the PPP now, the State of Michigan is working to make coronavirus relief easier for farmers to access by launching a grant program tailored to the particular needs of the industry.
On July 7, $15 million in economic assistance for Michigan farms and agricultural processors gained approval from the Michigan Strategic Fund, the Michigan Economic Development Corporation (MEDC), and the Michigan Department of Agriculture and Rural Development (MDARD) to mitigate financial woes wrought by COVID-19.
“Michigan’s food and agriculture sector has been especially hard hit by the COVID-19 virus, and this investment will provide critical resources to ensure the safety of the state’s food production industry and its workforce,” said Gov. Gretchen Whitmer.
Since July 15, applicants have been able to apply to the Michigan Agricultural Safety Grant Program as either a processor or a farm (but not both). Funds will provide grants of up to $1,000 per employee to fund COVID-19 mitigation costs, including but not limited to testing costs, personal protection equipment, facility needs, increased sanitation costs, employee training, and upgraded safety procedures for farm-provided housing.
Rural Lenders Will Make the Difference for Farm Families
And farmers seeking aid through the Michigan Agricultural Safety Grant Program won’t have to work with the SBA. Applications will be processed by East Lansing-based GreenStone Farm Credit Services, one of country’s largest rural lenders, including 31 branches in Michigan. They have a 100-year track record providing financial services to the agriculture industry, including short, intermediate, and long-term loans, equipment and building leases, life insurance, crop insurance, and accounting and tax services.
GreenStone is with Agricultural Safety Grant applicants every step of the way — they host the application portal, complete an initial screening of all applications and supporting documentation, and recommend applications to the MEDC for final approval and disbursements of the grants awarded.
“The foundation of GreenStone is built on supporting rural communities and agriculture. That means more than the loan products and financial services we provide, and this partnership with MEDC is a special opportunity to help all of agriculture,” said Dave Armstrong, president and CEO of GreenStone Farm Credit Services. “We are pleased to have the depth of experience and relationships with our members to know we can meet the needs of this program to benefit the many farmers and agribusinesses feeling the effects from the coronavirus pandemic.”
How Trump’s Trade Wars Hurt Michigan Farmers Before the Pandemic
Indeed, Michigan agriculture was on the ropes even before the coronavirus began to influence food supply chains in the state.
“Oversupply and low prices are a problem for corn, soy, and dairy,” Paul Mitchell, a professor of agriculture and applied economics at the University of Wisconsin, told Michigan Advance. “Trade wars only exacerbated the problem. And 2019 was a horrible production year.”
In 2018, the Trump Administration released emergency aid for farmers affected by the president’s trade wars with China and other nations. But one leader within the Midwestern agriculture industry said he feared he spoke for the bulk of the nation’s farmers when he called federal aid too little, too late.
“The USDA aid package is a Band-Aid on the gaping wound of unstable markets,” Darin Von Ruden, president of the Wisconsin Farmers Union, said in a statement made last August after the Trump Administration released a second round of aid for farmers affected by the president’s ongoing trade wars with China and other nations. Michigan Advance reports he called instead for efforts to work toward building an agricultural economy that is embedded in local and regional communities.
American Farm Bureau Federation (AFBF) president Zippy Duvall shared Von Ruden’s sentiment surrounding Trump’s trade wars and the reach toward making farmers caught up in those trade wars whole.
“The trade situation has tested farmers’ and ranchers’ patience for more than a year now,” Duvall wrote. “We are patient people — we’re used to playing a long game. However, we need to have a win in sight. Otherwise, patience will soon run out.”
Industry Eyes on the Election
While the Trump Administration has exacerbated problems for the agriculture industry leading into the coronavirus pandemic, Vice President Joe Biden is seeking to provide Michigan farmers with just the kinds of wins they need to make their businesses profitable again.
Vice President Biden has a plan to pursue a trade policy that works for American farmers, so they can stop paying heavy prices for Trump’s trade wars and begin to rely on a stabilized farm income. As president, Biden says he’ll work with America’s allies to negotiate from the strongest possible position, supporting the hundreds of thousands of jobs surrounding all the crops grown and products raised in the United States that are exported.
During a roundtable discussion focusing on issues impacting rural Wisconsin and the COVID-19 pandemic, Biden acknowledged ongoing financial hardships for farmers in the state. He agreed that bailouts are not the way forward for the industry, referencing the rounds of aid to some farmers hurt by the president’s trade wars.
“This crisis hit us harder and will last longer because [Trump] spent the last three years undermining the foundation of our economic strength,” Biden said. “ … agriculture exports are down, and manufacturing is a recession as well. Trump inflicted incredible harms on our farmers.”
In the meantime, Michigan farmers and ranchers can seek aid through the Michigan Agricultural Safety Grant Program.