President Donald Trump got right to the point as he addressed American Farm Bureau Federation members late Sunday afternoon, saying of the China trade deal, “I've told everybody you're going to buy a lot of land and you've got to get much bigger tractors right now.”
Speaking for about 45 minutes during his third trip to the annual convention, this year held in Austin, Texas, Trump thanked farmers for standing by him and reiterated the administration’s trade, regulatory and economic successes.
“We were stuck with one of the worst trade deals in history. They said we'll never get a deal done with China,” he reminded the crowd, telling them the trade deal would be a “bonanza.” Under the agreement, China promises to buy on average $40 to $50 billion in American agricultural products annually for each of the next two years, tripling U.S. ag exports to China. Trump pointed to a list of commodities that would benefit from the trade deal, including beef, pork, soybeans, poultry, seafood, rice, dairy, ethanol, eggs, animal feed, and biotech products.
Thanks to the words “on average,” however, the deal leaves room for China to flex on import levels in 2020 and 2021, as AFBF economist Veronica Nigh explains in a recent market report. You get an average of $40 billion with either $1 billion and $79 billion, or $40 billion and $40 billion.
Trump also touted USMCA, which was passed by the Senate last Thursday, saying it replaced “the catastrophe, the disaster known as NAFTA.” Ag economists have said NAFTA had tremendous value for agriculture, allowing the U.S. to export $40 billion worth of agricultural goods to Mexico and Canada in 2018.
“I don’t think the farmers have been in this position, maybe ever. I think China will go all out. It’s much bigger and much better than I even thought we’d get,” Trump told farm bureau members. “Most of all, the deal is very, very enforceable. That’s something we negotiated the most.”
Trump acknowledged that China targeted agriculture in the trade war, adding that he didn’t blame them. However, he said, China had treated the U.S. unfairly in previous deals, and he believed previous administrations had treated agriculture unfairly in making those deals.
“Frankly, they [previous administrations] treated you stupidly. Stupid to put our grain farmers in this position,” he said. “We are winning for our farmers and we are winning like never before.”
Economic success
Trump claimed net farm income is up more than $30 billion, an increase of nearly 50% in three years, adding that “under the previous administration, net farm income plummeted by 20%.” In fact, net farm income peaked in 2013 during the Obama administration.
The administration handed out $16 billion last year, and $12 billion the year before, to make up for lost trade war profits, totaling $28 billion over two years. They also distributed $9 billion in disaster relief and assistance to farmers, accounting for much of the $30 billion net farm increase Trump hailed during his speech.
“Farmers came to me and said ‘we don’t want anything. We just want a level playing field.’ And now you have it,” he said.
Trump said he believes better days – and better numbers – are to come, as his administration continues to “fix problems and clean up messes that others have neglected for decades.”
The president also defended Market Facilitation Payment distribution formulas, saying payments also went to small farmers. “We have a formula that’s working very well. If it’s not, call me directly and I’ll call Sonny and give him hell.”