Fleshing out a promise made two weeks ago, President Trump announced a $16-billion aid package on Thursday to buffer the impact of the trade war on farmers and ranchers this year. Speaking separately to reporters, Agriculture Secretary Sonny Perdue said billions of dollars of additional aid may flow in the future. “That depends on China.”
“The $16 billion in funds will help keep our cherished farms thriving,” said Trump at the White House. Perdue stood at Trump’s right shoulder and Zippy Duvall, head of the American Farm Bureau Federation, the largest U.S. farm group, was at the president’s left. The new aid package “will help us weather the storm,” said Duvall afterward.
The aid package, the second intervention by the administration since the Sino-U.S. trade war flared, could double federal payments made directly to farmers this year, now estimated to account for 16 percent of net farm income, and leave producers reliant on the government for revenue. The Kansas Farm Management Association says the so-called Trump tariff payments accounted for one-third of its members’ net farm income in 2018, the first year of aid.
Of the $16 billion available this year, $14.5 billion will go to producers of row crops, dairy, pork, nuts, and a handful of fruits, said Perdue and a half-dozen senior USDA officials during a teleconference. The government will use $1.4 billion to buy and donate surplus crops to food banks and schools. And it will award $100 million in grants to develop new markets overseas.
The three-pronged approach is similar in design to the 2018 Trump bailout payments, which were supposed to be a one-time boost for the sector. That package has paid $10 billion, mostly in cash to producers. The new package covers three dozen commodities compared with the nine earmarked for aid in 2018. For this year, the USDA says it will calculate trade war damage per county and divide aid money among farmers based on how many acres of the eligible crops are planted this year. The USDA will announce the payment rates later.
“It will vary county to county,” said USDA Undersecretary Bill Northey, partly because the mix of crops and their value varies across the country. The payment rate within a county will be the same to all farmers, regardless of what crops they plant. The so-called single payment rate was intended to assure farmers of aid without influencing their planting decisions.
“You won’t receive payments if you don’t plant,” said Robert Johansson, the USDA’s chief economist. The USDA said it will limit crop acreage eligible for payments this year to the amount of land planted in 2018.
USDA officials did not mention payment or eligibility limits for the new round of trade aid. A USDA spokesman was not immediately available to comment. Most USDA farm subsidies limit farmers to a maximum of $125,000 apiece, and people with an adjusted gross income of more than $900,000 are not eligible.
“This Rube Goldberg mess seems kinda crazy to me,” said Scott Irwin, a University of Illinois economist, on social media. “I call this ‘dirty dealing’ the U.S. farmer by not giving the full information on the payment rates.” Farmers who are prevented from planting due to rainy and wet weather this spring will not be eligible for the trade payments, he noted.
Farm groups applauded the prospect of additional revenue, though some expressed concerns. The American Soybean Association called for the removal of tariffs. The trade war has compounded a slump in farm income by crimping ag exports, which provide more than 20 cents of each $1 in farm revenue. “We thank President Trump for recognizing that our patriot farmers have borne the brunt of China’s trade retaliation,” said David Herring, president of the National Pork Producers Council. Half of U.S. wheat is exported, “which means we need a long-term solution,” said the National Association of Wheat Growers, listing trade agreements with China and Japan and ratification of the new NAFTA.
Michigan Sen. Debbie Stabenow, senior Democrat on the Senate Agriculture Committee, questioned “whether this plan is fair or equitable.” Rep. Jim Costa, a California Democrat, 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.”
Each segment of agriculture is treated separately. Field crops will see the “single payment rate” per county. Dairy producers will be paid according to production history, and hog farmers will be paid per animal. Tree nuts, fresh sweet cherries, cranberries, and fresh grapes will be compensated based on acreage in production this year.
Perdue said farmers would receive the aid in three tranches, roughly in August, November, and next January. If the trade war is resolved, tranches may be canceled, he said. The USDA gave a similar warning in 2018 but made both rounds of payments.
Eligible for payments this year are plantings of alfalfa hay, barley, canola, corn, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long-grain and medium-grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, upland cotton, and wheat, said the USDA.