News USA
Trump wants major cuts in agricultural subsidies
While American farmers find themselves in a deep crisis due to the Chinese trade blockade, US President Donald Trump is proposing to cut agricultural subsidies by about 2020% by 15. The USDA Department of Agriculture must also tighten its belt.
On Monday, March 11, Trump announced the preliminary budget that the United States Department of Agriculture (USDA) will have in 2020. The USDA could hold $20,8 billion under the draft plans, which is a $3,6 billion decrease (compared to current finances). This is therefore a reduction of 15%, writes Reuters news agency.
The considerable reduction must be achieved in two ways. First of all, the USDA needs to review its activities; overlapping activities should be eliminated, after which generous subsidy programs should be phased out.
Crop insurance
For the American farmer, the consequences may be even greater. The provisional budget proposes a sharp cut in crop insurance; the cost benefit of 62% is expected to be reduced to 48% and according to the republicans the number of farmers who can claim should also be reduced. In the proposal, only entrepreneurs with an income of up to $500.000 can claim crop insurance.
According to Donald Trump, the agricultural sector should be frugal with taxpayers' money. In the sector, this news could not have come at a worse time, as the trade war with China has left it in a deep crisis; the soy and pork sectors in particular have been hit hard. However, given that the Democrats have the upper hand in Congress, the budget is not expected to be approved.
Safety net
U.S. weather insurance acts as a safety net for the industry. The proposed budget cut refers to the so-called 'premium subsidy' that farmers can take out. The program is complex and comprises different levels, whereby the companies can take out various insurance policies. These insurance policies can reimburse up to 80% of their loss of income when a crop cannot be harvested due to extremes.
The proposal also aims to cut direct payments to US farmers and the SNAP program. This program supports citizens with low or no income in buying healthy food. The USDA is responsible for this. The reduction of this budget has already been the reason for a heated discussion.
Niels van der Boom
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