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Farmer aid in wake of China trade war to be $15-20b

Secretary Perdue said another round of trade aid will include direct payments similar to first round.

Speaking from South Korea, Secretary of Agriculture Sonny Perdue on Wednesday evening confirmed that the U.S. Department of Agriculture will be looking to offset the trade disruption to farmers in the range of $15-20 billion.

“We’re expediting at the President’s direction so farmers, as well as China, can know they cannot use the political impact of damaging our farmers to our great exporters in this trade disruption,” Perdue said.

Although Perdue said USDA continues to work on finalizing exactly how the aid will be constructed, the agency is taking into account comments from stakeholders on the last round of aid. “We are assuming it will contain direct payments for commodities. Certainly, the President’s concept of buying commodities for humanitarian purposes may also be part of that,” Perdue said in a media call. He acknowledged that certain commodity groups were unhappy with how the direct payment calculations the last time offered disproportionate aid to some sectors over others.

He said the $15-20 billion level is what USDA economists feel is a legally defensible level on the amount of trade damage dealt to U.S. producers. He also said the payments will comply with World Trade Organization restrictions on subsidy limits.

Last August, and again in December, USDA offered producers up to $12 billion in the Trade Mitigation Program, including the Market Facilitation Program (MFP), which offered direct payments to producers of commodities affected by the trade disruption. As of May 13, 2019, $8.52 billion has been paid out to farmers under MFP, with the top five states receiving payments: Illinois, Iowa, Kansas, Nebraska and Indiana. The top five commodities include soybeans, corn, wheat, cotton and sorghum. MFP provided up to $10.2 billion for payments to corn, cotton, dairy, hog, sorghum, soybean, wheat, fresh sweet cherry and shelled almond producers. Not all of the allocated funds have been disbursed since producers can report their production through May 17, 2019.

Perdue said he is confident that the aid will make up for the damage the tariff war has caused, based on the numbers he has seen from China in proposing to come back and make more purchases of U.S. agricultural commodities. He said he does not believe there will be any long-term harm to the Chinese market and is still hopeful that the two countries can reach a mutually beneficial trade relationship.

“China will have to engage in a way that’s meaningful and enforceable and give us an opportunity to have access to their markets,” Perdue said.

Although Perdue said the funds would come from the Commodity Credit Corp. (CCC), he said he’s informing Congress to continue to discuss the trade aid package.

The lobbying for how to allocate funds and offer aid also continues.

In a letter to Perdue on Wednesday, Feeding America said USDA’s ambitious undertaking of purchasing $1.2 billion in commodities for distribution through emergency feeding programs like to its member food banks was impactful. “Our 200 member food banks have provided overwhelmingly positive feedback on working with USDA to bring the food purchased under this program to Americans in need,” Feeding America chief government relations officer Kate Leone wrote.

“Although there have been bumps along the way as states and food banks adjust to a higher volume of food, everyone has approached this challenge with a commitment to ensuring the program’s success and learning from the experience. The work your team is doing to implement this program is already making a meaningful impact,” Leone told Perdue.

Matt Herrick, senior vice president of executive and strategic communications at the International Dairy Foods Assn., said if Perdue re-ups the program in the new round of trade aid, it “should be a win for struggling dairy farmers and food banks if he decides to keep it.” The dairy industry is talking to USDA to see if there is a place in the next trade aid package to support struggling dairy farmers. The last package included a $135 million purchase of fluid milk for food banks — the first time ever that was done.

In a separate letter to Perdue, National Farmers Union president Roger Johnson provided recommendations for how best to “craft a package that will adequately address the broad, long-term impacts to all of American agriculture.”

In a separate statement, Johnson said, “Though China’s tariffs have specifically targeted soybeans, pork and sorghum, many other commodities have been impacted, both directly and indirectly. We ask that trade assistance be offered to producers of all affected commodities and that payment rates be based on historical production. In addition, we recommend that the USDA address the growing problem of oversupply by providing farmers with incentives to reduce overall production.”

Johnson added, ““The ever-worsening financial challenges being forced on family farmers and ranchers cannot be overstated. We urge the USDA to ensure that this assistance package provides fair and equitable relief to all family farmers impacted by disruptions in international markets.”

TAGS: Farm Policy
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