Despite President Donald Trump’s desire to soften the blow to farmers from the trade war fallout, criticism of the lack of a long-term strategy was voiced on Thursday after limited details of the program add further uncertainty for farmers.
The U.S. Department of Agriculture plans to allocate as much as $16 billion, including $14.5 billion in direct payments to producers through the Market Facilitation Program (MFP). Additionally, USDA has designated $1.4 billion for commodity purchases through the Food Purchase & Distribution Program as well as $100 million for the development of new export markets through the Agricultural Trade Promotion Program.
Further details of the program will be known as the rule advances through the Office of Management & Budget, USDA officials noted Thursday morning in explaining what is known of the trade aid package. Although a trade solution is not anticipated ahead of the first payment rollout this summer, Agriculture Secretary Sonny Perdue did leave the door open for a resolution with China or others ahead of the projected second round tranche in late fall or November and a possible third payment perhaps early in 2020.
Iowa secretary of agriculture Mike Naig, a Republican-elected official, appreciated Trump and USDA offering an interim solution to assist farmers affected by trade disruption. “However, farmers want trade, not aid. Farmers need markets to sell their products. This current situation is not sustainable. We need long-term trade agreements, and I believe we can get there, but we need China to come to the table to negotiate,” Naig said in a statement following the announcement.
Although USDA said the program was designed to not skew planted acres, that may not be the case.
Iowa Soybean Assn. president Lindsay Greiner stated, "Short-term, stair-stepped subsidies are a poor remedy for trade. They stimulate production but not sales and, therefore, do little to undo the long-term logjam caused by not selling soybeans to destinations like China, the world’s number-one customer. Today’s announcement could very well bump planted soybean acres and, thus, production, almost assuring that the pile of soybeans will not be reduced."
Roger Johnson, National Farmers Union president, said while this trade aid package is an improvement over last year’s MFP, by definition, it fails to provide predictable, consistent and adequate relief across American agriculture. “At the same time, basing payments on 2019 planted acres fails to help those who have faced or are facing impossible planting conditions,” Johnson noted.
He added that, ultimately, this package is only a short-term fix for a very long-term problem. “Farmers rely on markets to make a living. Our ongoing trade wars have destroyed our reputation as a reliable supplier and have left family farmers with swelling grain stores and empty pockets," Johnson said. "The very least we can do is provide our country’s struggling food producers with the certainty of a longer-term plan that also addresses the persistent and pernicious problem of oversupply.”
The Institute for Agriculture & Trade Policy (IATP) called the trade aid package “the result of an erratic and incoherent trade policy that appears to include little advance planning or an end game.”
Ben Lilliston, IATP director of climate and rural strategies, said following the first trade mitigation payments in late 2018, Trump and Perdue promised that it would be a one-time initiative because a new U.S.-China trade deal would soon be in place. “At best, they badly miscalculated,” Lilliston stated.
“The new trade aid package is not a plan to make farmers whole, nor does it address core problems in the agriculture economy — like crippling over-production or the loss of competition due to the growing market power of a handful of global corporations. Unfortunately, the Trump Administration seems set on creating conditions for continuous trade aid," Lilliston added.
Partisan concerns over the plan also were voiced by Democrats in Congress.
House agriculture livestock and foreign agriculture subcommittee chairman Jim Costa (D., Cal.) said, “This rushed and poorly planned bailout raises the troubling possibility that some of the nation’s most valuable agricultural products, like the fruit and vegetable crops produced in central California, will receive a different and possibly reduced level of aid.”
Costa added, “For more than a year now, producers of every commodity have said the same thing: They want long-term access to export markets, not hasty attempts by the federal government to clean up its own mess. Rather than waste more time and resources on temporary Band-Aids, USDA should focus on implementing the safety net Congress established in the farm bill. I urge the White House to rescind the tariffs and sit down in a constructive manner with the Chinese to address issues that will actually improve the market for our farmers. This just shows, as I’ve long said, nobody wins a trade war; everyone has leverage.”
Senate Agriculture Committee ranking member Debbie Stabenow (D., Mich.) noted, “Too many farmers are struggling as this Administration continues to pursue a chaotic trade agenda. Our farmers need a focused strategy, access to export markets and long-term stability.”
Stabenow added, “Unfortunately, this complex scheme leaves them with more questions than answers. I have a number of concerns about whether this plan is fair and equitable to all farmers. Government checks are no replacement for lost markets, and this temporary support will only go so far.”