As trade disputes with Canada, China and Mexico drive down corn and soybean prices and threaten billions of dollars of U.S. exports, the Trump administration may wind up turning to a Depression-era federal program to help farmers.
The federal government subsidizes crop insurance and other programs to help farmers during times of distress. However, those programs aren’t helpful during a trade war, according to Chad Hart, an agricultural economist at Iowa State.
Hart believes the government could use the Commodity Credit Corporation Charter Act, which was established in 1939 and allows the Department of Agriculture to borrow money from the Treasury to buy commodities and help farmers recover from low prices.
Hart said the program “sits in the shadows until it’s needed for something like this” and can be used to issue up to $30 billion worth of bonds.
Joe Glauber, a chief economist at the USDA during the Obama administration, said it’s not clear whether the USDA would use the power to buy commodities or pay farmers directly. But either way, he said, taxpayers would fit the bill.
Read more: KCUR