The Trump administration will send more than $7 billion in trade war payments to farmers this summer, a total that could soar to more than $14 billion if the Sino-U.S. dispute persists into the winter, said officials on Thursday. For the second year, agriculture is the only sector of the U.S. economy to receive trade mitigation payments.
“Farmers have borne a disproportionate share of trade retaliation,” said Agriculture Secretary Sonny Perdue, so another year of Trump tariff payments is justified. Producers, he said, “continue to be affected by trade damages.”
President Trump announced in May, when talks with China broke down, that up to $16 billion was available in trade aid for agriculture. Farmers and ranchers would get the bulk of it, up to $14.5 billion in cash. Some $1.4 billion would be spent to buy and then give away foods, such as pork and poultry, affected by the trade war, and $100 million was awarded to trade groups to find new overseas customers.
In an announcement on Thursday, the USDA said that roughly half of the cash for farmers will be paid in mid- to late August. Some row-crop growers will get a one-time payment of $15 an acre, though others could ultimately collect $150 an acre if the trade war continues. More than two dozen crops, from corn and soybeans to crambe and chickpeas, are eligible. Specialty-crop payment rates range from $146 an acre for nuts to $5,700 an acre for gingseng. The payment rate for hog farmers is $11 for each pig they own. The payment rate for dairy farmers is 20 cents per 100 pounds of milk they produce.
Signup will open on Monday and run through Dec. 6.
While farm groups welcomed the assistance, they made it clear they prefer open trade. “These are difficult times for agriculture, and the longer these trade wars continue, the deeper the impact on farm country,” said Zippy Duvall of the American Farm Bureau Federation. The National Pork Producers Council called the aid “partial relief,” and president Ben Scholz of the National Association of Wheat Growers said it was “a Band-Aid when we really need a long-term solution.”
Scholz said, “NAWG understands holding China accountable for its WTO violations and unfair trade practices, but a trade war is not the solution when farmers are the casualties.”
Democratic lawmakers such as Sen. Debbie Stabenow of Michigan said, “Short-term inequitable payouts are not a replacement for markets and a coherent trade strategy.” Republican Rep. Michael Conaway of Texas said Trump was “firm in his commitment to defend America’s farmers and ranchers from China and other global trade cheats.”
The Trump tariff payments are just part of a flood of federal money into farm country this year. Farmers will also receive money from traditional crop subsidies, crop insurance indemnities, and a recently enacted disaster bill. A USDA spokesperson was not immediately available to say how much of U.S. farm income would come from the government. In March, before the new round of trade payments was planned, it said the estimated $11.5 billion in direct farm program payments would be equal to 16 percent of the expected $69.4 billion in net farm income.
To divide the $14.5 billion among producers, USDA officials said they calculated trade damage per county and then per acre of eligible crops in each county. The cash will be disbursed in three tranches. The first, expected in mid- to late August, would equal half of a farmer’s estimated total assistance or a minimum of $15 an acre. Second and third tranches, in November and January, would hinge on trade developments and market conditions.
The payment limit for each of the three categories of production — row crops, specialty crops, and hogs and dairy — will be $250,000, with an overall payment limit of $500,000 per producer, per entity. The USDA usually allows payments to be doubled for a married couple. Eligibility generally would be limited to people with less than $900,000 in adjusted gross income. People with a higher AGI would be eligible if at least three-fourths of their income is from agriculture.
Growers with prevented-planting acreage qualify for a payment of $15 an acre on the land. Perdue said the wettest spring in a quarter-century would result in a record-large total for prevented planting. USDA officials declined to elaborate.
Poultry would account for the largest part of the food purchase program. The USDA said it would buy $432 million worth of poultry, $208 million worth of pork, and $200 million worth of canned food, soups, and cereals.
When it calculated trade damage, the USDA looked at the past decade of sales to China and other countries with tit-for-tat tariffs on U.S. farm exports and chose the best year of sales. Perdue shrugged off the suggestion that the USDA had exaggerated losses. “It does describe what our trade partners could be importing from us tomorrow,” he said.
USDA chief economist Robert Johansson said payments were based on overall acreage rather than by crop, so producers would not feel compelled to plant a particular crop, such as soybeans, to qualify for aid. “The county rate will be the same for any crop,” said Johansson. “Of course, there will be county [by county] differences.”
The USDA list of payment rates for each U.S. county is available here. Some of the highest rates are in cotton country.
The proposed USDA rule on the payments is available here.