Economists say Trump’s Proposed Budget Cuts Could Hurt Agriculture

April 13th, 2017


Category: Policy

Business.Office.Writing450x(Ag Professional) –  Retailers, along with farmers, could feel the effects of proposed federal budget cuts if President Trump’s spending plan is adopted, according to agricultural economists at The Ohio State University.

Trump’s plan calls for a 21 percent reduction to the U.S. Department of Agriculture and includes cutting staff at agricultural service offices, along with statistical reports on crop prices and production levels that some farmers and others in the agricultural community rely on.

Having fewer staff at USDA offices could hinder farmers’ ability to access important services such as loans, crop disaster assistance and land conservation measures, including water quality preservation and erosion control, says Zoë Plakias, an agricultural economist with Ohio State’s College of Food, Agricultural, and Environmental Sciences (CFAES).

“Cuts of this nature could potentially impact farmers across the commodity spectrum,” Plakias says. “The service center staff are the folks working with farmers and living in those communities day in and day out.”

Yet to be determined are exactly which offices would face staff cuts, how large the cuts would be and, most importantly, whether Congress will approve Trump’s planned cuts.

Another possible concern for the agricultural community is a reduction in statistical reports generated by the USDA. Some farmers use these reports to help make decisions, and researchers and analysts use them in their work to inform retailers and other industry players, Plakias points out.

“It’s hard to think of any decision that isn’t touched at least indirectly by the information in the reports,” notes Carl Zulauf, agricultural economist and professor emeritus, also with CFAES.

The USDA is an unbiased provider of information, and anyone can use its reports to determine trends in production, as well as supply and demand for various agricultural products, Zulauf adds.

He points out that Trump’s proposed budget is a starting point for negotiations.

Additional budget cuts Trump has proposed include eliminating the:

funding for the Great Lakes Restoration Initiative, which helps keep Lake Erie clean

water and wastewater loan and grant program

McGovern-Dole International Food for Education and Child Nutrition Program, which supports education, child development and food security in low-income countries

discretionary activities of USDA’s Rural Business-Cooperative Service, which provides business development and job training opportunities for rural residents

Besides Trump’s budget, another crucial consideration for the ag industry is his proposed international trade policy, which, based on statements made during the election, could include a 45 percent tax on products from China and a 35 percent tax on Mexican imports.

It is unclear whether those taxes will be imposed, but if they are, China could retaliate with tariffs against U.S. products. The U.S. exports a significant amount of corn to Mexico and soybeans to China, notes Ian Sheldon, a CFAES agricultural economist.

Add New Comment

Forgot password? or Register

You are commenting as a guest.