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Trump’s infra plan: A game-changer for US farmers?

The administration has pledged $50bn to boost transport and connectivity across rural America, but will it make a difference? We asked insiders.

Here it was at last. Earlier this month, acting on a much-trumpeted campaign pledge, US President Donald Trump unveiled a proposal to use $200 billion in federal funds to spur $1.5 trillion in new infrastructure investment.

The most innovative bit of the plan was probably its focus on rural infrastructure, with a quarter of the money put on the table – $50 billion – dedicated to such projects. That shift in priorities was welcomed by industry players. “While past infrastructure plans have left rural America in the dust, this administration has not forgotten the rural communities that form the backbone of our nation,” said American Farm Bureau president Zippy Duvall.

The plan’s rural piece would work differently from the rest. Non-rural infrastructure projects would mostly be supported in two ways: through direct federal investment matched by state and local funds, and through loans and private activity bonds. By contrast, the $50 billion in incentive funding for rural infrastructure would go directly to state governors as block grants.

“As a whole, this president has focused a lot on rural America. But when the rubber hits the road, there still seems to be a disconnect”
Matt Perdue, National Farmers Union

Some thought this feature rather adequate. “It provides a lot of local control back to the states to prioritize those rural projects that are most needed in their communities,” said Andrew Walmsley, the Farm Bureau’s congressional relations director. But on this issue, and more generally, important questions remained.

“The plan is aspirational at this point since the president may propose but the Congress disposes under our system of government when it comes to spending,” Bob Stallman, a former Farm Bureau president for 16 years who leads specialist advisory Oak Canyon Ventures, told Agri Investor.

“There are questions as to how well the state block granting mechanism will work.”

Connecting cropland

Observers appreciated the plan’s focus on transport. “For us to get our goods from the neighbor down the street to markets around the world, we’ve got to have the infrastructure to get it there and be competitive when we do it,” Walmsley told Agri Investor.

The proposal’s emphasis on broadband also made a lot of sense, said Matt Perdue, government relations representative at the National Farmers Union, who pointed out that 39 percent of rural America still doesn’t have access to high-speed internet. “That’s a key economic driver to opening up opportunities in education, increasing efficiencies with existing businesses, recruiting new businesses to rural areas and connect farmers to the markets.”

Walmsley noted that broadband is crucial to “connecting all the innovative things we’re trying to do – from better storage to smart-power farming and precision ag.”

The mooted policy also aims to speed up environmental permitting, a move seen by some as potentially weakening safeguards but greeted positively by farmers.

Disconnected administration

Yet, some of the contemplated measures raised questions. Walmsley, for instance, was concerned about suggestions that waterways could become tolled, increasing costs for farmers. About 60 percent of all US grain moves through such channels, he said, with no other sensible alternative.

“When a road is tolled, you generally have the possibility to avoid the fee by using the existing interstate expressway. But if you toll waterways, that cost will ultimately be passed on to farmers.” He did not sound overly worried, however. Such changes have been proposed in the past, he said, without being accepted on Capitol Hill.

More fundamental was the conflicting signals sent by the president on the broader support he is willing to give to US agriculture, Perdue told Agri Investor. The infrastructure plan came as Trump was also releasing his proposed budget, which includes many cuts to programs popular with farmers and an overhaul of crop insurance.

“It’s been one of our biggest disappointments,” Perdue said. “As a whole, this president has focused a lot on rural America. But when it really comes down and the rubber hits the road, there still seems to be a disconnect and that investment doesn’t seem to be there. So we see this as the beginning of the conversation, and we’re still hopeful we can make a lot of positive changes to this.”