American farmers can expect a bumper crop this year in corn, soybeans and, most of all, federal handouts.
Last Wednesday, Agriculture Secretary Brooke Rollins announced $500 million in new funding for domestic fertilizer production.
That may sound like a lot, but it’s nothing compared to the projected $44 billion of federal dollars that will go to farmers by the end of 2026 — more than a fourth of estimated net farm income.
And the share of federal cash could tick up further still as President Donald Trump proposes another $11 billion in his latest supplemental request to Congress to help farmers deal with the economic effects of the Iran war.
Most of the subsidies are intended as compensation for the White House’s own policies.
Fertilizer prices have spiked because of the closure of the Strait of Hormuz amid the U.S.-Israeli war with Iran.
Trump promised farmers $12 billion last year after his trade war with China forced many to sell their soybeans at a loss. He also raised the quota of soybean-derived biofuels in gas and diesel, artificially raising demand for soy.
While farmers have struggled to deal with Trump’s trade and Iran policies, the subsidies go beyond cushioning farms in a rough period.
Net farm income is still above the 20-year average. If Congress manages to pass the extra $11 billion, government payment to farms would be at a record high. The handouts come on top of existing government supports such as crop insurance.
Such market distortions have consequences. They could keep inefficient farms afloat while spurring excess supply. That might end up suppressing commodity prices in the long run.
The federal government is also propping up meatpackers as they struggle to break even with higher cattle prices caused by shortages. Last Tuesday, the Agriculture Department pledged up to $500 million for small- and medium-sized meatpackers.
The White House is trying to shore up support with key constituencies ahead of the midterms. But state capitalism is no solution for farmers — or the American people struggling with high prices — in the long run.
