President Trump’s long-running trade war cut off farmers’ access to China’s enormous market. Across the farm sector, commodity prices remained in the doldrums.
Yet the Agriculture Department now estimates 2019 was farmers’ most profitable in five years. What happened?
Three words: Market Facilitation Program. Or, as it’s more commonly known, the farm bailout.
Without government assistance, U.S. farm income would have fallen about $5 billion from its already-low 2018 level. So the $14.5 billion in bailout funding announced so far represents a substantial reversal of fortune. About three-quarters of the funding already has been distributed.
U.S. farm-sector profit, adjusted for inflation

Note: Insurance payouts are net of insurance premiums; data for insurance isn’t available before 2008.
Source: Agriculture Department’s Economic Research Service
“If you look at the prices, the weather and the trade imbalances, you’d expect the farm sector to be in a terrible spot,” Montana State University economist Eric Belasco said. “It’s not.”
That’s the sector overall, however — the total income earned by all 2 million farms and ranches in the United States. The top-line figure obscures profound differences.
Most farmers benefited from the bailout, Belasco said, but because bailout money is distributed based on acreage and not farmer’s need, about half of the money (47 percent) went to the largest 10 percent of operations. The numbers come from an analysis by Belasco and his colleague, Vincent Smith. (Both men are also affiliated with the right-leaning American Enterprise Institute.)
The disparity runs too deep to be solved by a government bailout, Belasco said. According to 2018 data, more than 70 percent of farm households had a high level of financial risk in 2018. But of those that qualify as very large (median income $756,000), only 25 percent fit into that same category.
Payments to farmers in 2019

Note: Data are as of Nov. 22, 2019, at which point a minority of payments weren’t yet distributed.
Sources: Agriculture Department’s Farm Service Agency, via a FOIA request by Eric Belasco of Montana State University
“The philosophical question is: Should we have trade aid for farmers who are at a low risk of losing their farm?” Belasco asked. “Most other safety-net programs are income-adjusted,” he added later. “Farm policy doesn’t do that at all.”
Indeed, the past two years have been marked by a sharp rise in bankruptcies in the nation’s deepest farm country. A quarter of the nation’s farms sit in super agriculture-dependent areas — places where more than 1 in 7 people live on farms. Among them, the rate of farm-specific bankruptcies (Chapter 12) has more than tripled since 2015.
Family farm bankruptcies rise in deepest farm country
Rate per 10,000 farms of family farm (Chapter 12) bankruptcies, shown as a rolling annual total. Counties are grouped by the share of their population that lives on farms.

Note: Chapter 12 can also be used by family fishing operations.
Sources: Robert Dinterman, Ohio State University (bankruptcies); Agriculture Dept. (farms); Census Bureau (population)
But farms’ stress doesn’t just show up in family-farm bankruptcies. Some farmers don’t meet the requirements for Chapter 12, and many others in farm country depend on farms for their livelihood even if they don’t grow much themselves. Across the board — whether it’s the liquidation of Chapter 7 or the restructuring of Chapters 11 and 13 — bankruptcies in these farming-dependent areas are rising faster than in the rest of the nation.
“Farmers as a whole keep expecting their farm income to be better than what it turns out to be,” said Robert Dinterman, an agricultural economist at Ohio State University who constructed the farm-bankruptcy database we analyzed in this story. So, he added, “each year farmers are digging themselves in a larger and larger hole — they’re accumulating more debt than they’re able to pay off.”
“I don’t think there’s any reason to think there’s going to be any relief in the future,” Dinterman said. Only a dramatic new round of government payments or an emphatic resolution to Trump’s ongoing trade wars could change in the industry’s trajectory, he said.
Overall, the growth in farm debts has outstripped farmers’ stagnant equity stakes, leaving them at higher risk of insolvency than they have seen at any point since the end of the Great Recession. It’s compounded by an unwelcome mix of lackluster prices for corn and soybeans on the open market and low yields caused by extreme weather.
“I’ve never met anyone that could think of a worse time for planting conditions,” said Todd Hultman, a market analyst with the data firm DTN and a regular on the farm-show circuit. “In the modern era, this has been by far the worst planting season for corn and soybeans.”
“It usually takes more than one bad year to get farmers to declare bankruptcies,” said Carrie Litkowski, who leads the USDA team that estimates farm income. She added that “it seems like a lot of farmers might be saying every year, ‘I’ll just hold out for one more year.’ They’re just hoping for a turnaround.”
Crop insurance payouts from flood or excessive rain damage

Source: Agriculture Department
Note: Adjusted for inflation.
Ohio State University Farm Income Enhancement Chair Ani Katchova said the shift in income sources may surprise farmers. “Farmers are getting a little bit less from cash receipts and a little bit more from government payments,” she said.
Even with help from the federal government, U.S. farm profits are only two-thirds of the inflation-adjusted $136.6 billion farmers pocketed in 2013, the best year in recent memory. This year’s total is almost directly in line with average profits since 2000, adjusted for inflation. The bailout alone can’t make up for the collective hammering farmers took from four straight subpar years.
“Ag policy has this long history of mixing politics with ad hoc disaster programs,” Montana State’s Belasco said. “These programs continue in spite of efforts to formalize disaster relief through programs like crop insurance.”
According to Belasco, 7 in 10 assistance dollars have gone to farmers growing corn and soybeans. The relentless rain that delayed planting of both crops this spring has been compounded by early winter weather. Farmers, especially in the northern reaches of the farm belt, may not be able to harvest their snowed-in corn crops until next year.

Ducks fly from a water-covered cornfield south of Mandan, N.D., on Oct. 21, 2019. (Tom Stromme/The Bismarck Tribune/AP)
“They all cringe at the thought of having corn stand in the fields over winter where it just becomes raccoon feed and deer feed,” Hultman said. “The longer it’s out there, the worse it’s going to be.”
According to University of Illinois economist Scott Irwin, the bailout payments have “fully compensated” farmers for the damage from the trade war with China. But it’s possible that the trade war dynamics may soon reverse for farmers.
Under a new deal reached earlier this month, chief U.S. trade negotiator Robert E. Lighthizer expects China to purchase $40 billion to $50 billion in agricultural products. That goal seems “difficult to achieve,” according to Peterson Institute for International Economics senior fellow Chad Bown. It would far exceed the $24 billion baseline set in 2017, and it’s not clear which agricultural products the U.S. would sell to make up the difference.
“If the trade deal is signed and it’s real, I think we’re going to be looking at a China-driven miniboom in the ag sector,” Irwin said. He then clarified that if the United States somehow really did sell as much as $50 billion in agricultural commodities to China, that miniboom would upgrade to a “full-scale boom.”
“I don’t even know how we’d get to that number,” Irwin said.
According to OSU’s Katchova, who recently chaired a panel that reviewed the USDA’s income forecasts and estimates in extraordinary detail, the USDA’s estimates are typically accurate this late in the year.
“An individual farmer may experience a harder year with lower farm income, but on average, across all farmers, farm income is expected to increase for this year,” she said.
“These are not great times,” Katchova said, “but they’re now becoming average times.”
Tim Meko and Dan Keating contributed to this report.