The winner of the presidential election on Tuesday, whether it’s President Trump or Democratic nominee Joe Biden, will face agricultural issues that include the trade war with China and the approaching end of mammoth stopgap subsidies that have propped up farm income for two years in a row. The pandemic could be a complicating factor for action.
China is likely to miss its targets for purchases of U.S. goods, including food and agriculture, under the “phase one” agreement signed in mid-January and there is no clear path for resolving the trade war. After blaming China for the pandemic, Trump has taken a hard line against Beijing. “We will end our reliance on China — it’s already begun,” he said on Sunday in Iowa. Biden says he would form a coalition with U.S. allies to confront Chinese trade practices.
It would be difficult for Biden to normalize agricultural trade with China by removing U.S. sanctions without concessions on China’s part, said senior research fellow Joe Glauber of the IFPRI think tank. One route might be “an agreement with other WTO members to challenge China on Phase Two issues like business practices but that means a resolution of the WTO dispute settlement AB (appellate body) crisis,” said Glauber, referring to another trade issue.
The Trump administration has blocked appointment of judges to the WTO appellate body, which makes final rulings when a WTO decision on a trade complaint is challenged, and effectively stymied its work as leverage for change in WTO operations. More recently, the White House objected to the leading candidate, from Nigeria, for appointment as the new WTO director general, who would be the architect of WTO modernization. The WTO General Council is scheduled to meet on Nov. 9 to see if there is consensus on the next director general.
U.S. ag exports slumped after the trade war deepened in mid-2018 and the administration responded with $23 billion in cash payments to farmers and ranchers to mitigate the impact on agriculture. The last of those payments were made early this year, just before the pandemic, which drove down market prices for most major agricultural commodities.
Some $19.1 billion in pandemic relief payments have been made to farmers since May, according to USDA data on Monday. The first version of the stopgap Coronavirus Food Assistance Program has paid $10.3 billion on 649,963 applications and the second version, known as CFAP2, has paid $8.76 billion on 518,164 applications. In each round, payment limits are $250,000 per farmer or entity and $750,000 for corporations, trusts and partnerships.
CFAP2 payments may spill into the new year — up to $14 billion is available — but farm supports are forecast to contract sharply in 2021, to around $10 or $15 billion, with the expiration of the Trump subsidies. In September, the FAPRI think tank estimated that net farm income could plunge by 17 percent in the new year. Commodity prices have improved somewhat in the past couple of months as supplies tightened. Administration and congressional leaders may face demands for aid to agriculture.
For the president and Congress in 2021, “the economy and the pandemic will be at the forefront, but it is hard to tell what unforeseen evens will dominate the latter part of the term,” wrote economists Brent Gloy and David Widmar in a recent blog. “Each initiative, goal or piece of legislation pursued is competing for the bandwidth of time, budget and public attention.”
The Senate Agriculture Committee may begin discussions in 2021 of the next farm bill, said Sen. John Boozman, Arkansas Republican, in late October. Boozman is expected to become Agriculture Committee chairman if Republicans retain control of the Senate. “The next farm bill will be in 2023, which will be here before we know it. We face many challenges and hopefully, our trade situation will be better and we continue to look for new markets,” said Boozman in a Red River Farm Network report.