Minnesota State Wire

An economics expert says the trade war bailout is not actually helping U.S. farmers.

"The trade war with China is really hurting American agriculture," Tim Kehoe, with the Department of Economics at the University of Minnesota, said in an interview with Minnesota State Wire. "These bailouts, for small farmers at least, are not gonna be enough to keep them all going."

Kehoe said the number of bankruptcies are going up and small farmers are complaining that big agro-businesses are getting most of the money.

"As a family farmer, all you have is your farm," Kehoe said. "If you’re a soy farmer in Minnesota and dependent on exporting your soybeans to China, the bailout can maybe keep you alive, but you’re still losing money and the outlook isn’t good. "

Kehoe said the bailout is certainly not big enough for family farms.

"They certainly can’t make money off of it," Kehoe said. "After a number of years where they lose money, they’ll have to go out of business."

Kehoe said he thinks it’s something that is bad for farmers in the Upper Midwest.

"We depend on trade with China and Mexico," Kehoe said. "When all of this started, (with) the tariffs in China on soy coming from the United States, the purchases of soy in China switched to places like Brazil and Argentina."

Kehoe said the United States is not the only country that produces a lot of soy.

"Once we get things straightened out, these purchases have already switched their trading relationships to Brazil and Argentina," Kehoe said. "They’re not going to come back to Minnesota or Iowa. This trade war with China has really been devastating."

Kehoe said he doesn't think the trade war is the right thing to do.

"A lot of farmers think, 'Oh, I’m suffering, but this is helping the United States,' but I don’t think it’s helping us that much," Kehoe said. "The sacrifices the farmers are making, it’s not really that good for the United States."

Kehoe said the effects of the trade war have been felt beyond U.S. borders.

"It’s hurting not just the United States and China, but it’s hurting the whole world economy," Kehoe said. "When I say it’s hurting the world economy, I don’t mean to say that there are not some countries that benefit, because of course there are. Mexico is an example of a country that benefits."

Kehoe said not everybody is hurt in the same way.

"One of the groups who is hurt the most is U.S. farmers," Kehoe said. "I don’t think this bailout is solving any real problems."

Several studies have reported that the payouts farms can receive are about twice of what their actual harm was that they suffered during the trade war, NPR reported. Thousands of farms got more than $100,000 each, while bigger farms received bigger payments. 

The USDA hasn't announced if it will do more trade-related payments in 2020, NPR reported.