Crop and livestock producers are likely to learn on Monday how the Trump administration will allocate up to $12 billion in aid to offset the impact of retaliatory Chinese tariffs on the U.S. farm sector, said Agriculture Secretary Sonny Perdue. Just days later, the USDA is expected to lower its forecast of farm exports because of the trade war and to update its forecast of U.S. farm income, now estimated as the lowest in 12 years.
While in upstate New York on Thursday, Perdue said that details of the tariff bailout should be available shortly. “While we were hoping to have it out and cleared by Friday, it may even be Monday,” he said in a USDA Radio News story. The White House has been reviewing the USDA’s proposal for cash payments to producers. Perdue has said that up to $8 billion would be paid out directly, based on farm production this year.
“Payments will still begin right after Labor Day, as the secretary has always said,” said a USDA spokesman. Agency officials said in late July that a portion of the aid money would be spent on purchasing excess foods for donation. A small amount also would be given to trade groups to develop new foreign markets for U.S. farm exports.
Exports account for 20 cents of every $1 in farm income. The United States faces trade retaliation from its four largest customers for ag exports — China, Canada, Mexico, and the European Union, in that order. Soybeans are the largest ag export to China, accounting for roughly 60 percent of sales in 2017. Soybean growers would get the lion’s share of the Trump payments, according to a published report, although other commodities have also seen large declines in market prices.
Perdue admitted that allocation of the aid “is not going to seem like it’s equitable,” reported Reuters.
“Trade is important. Tariffs will slow down trade growth,” said economist Luis Ribera of Texas A&M University during a webinar on Thursday. “Competitors are excited,” he said, at the opportunity to expand their market share at the expense of the United States. “Once you lose market share, it’s hard to get it back.”
The USDA traditionally makes its first forecast of farm exports for the new fiscal year at the end of August, at the same time it updates its forecast of shipments for the current year. In a quarterly forecast on May 31, the USDA estimated exports of $142.5 billion — the second-highest total ever — for fiscal 2018, which ends on Sept. 30. The record is $152.3 billion in fiscal 2014.
Former USDA chief economist Joe Glauber said that “a downward revision, certainly, in exports” seemed likely in light of counter-tariffs implemented by other countries in response to President Trump’s policy of confronting trading partners and his drive to reduce trade deficits. Many of the levies on U.S. exports took effect in July. The export forecast is scheduled for Wednesday.
U.S. farm income plummeted following the collapse in 2013 of the commodity boom that had propelled corn, soybean, and wheat prices to record levels in 2012. In February, the USDA forecast net farm income of $59.5 billion this year, the lowest since 2006, when the commodity boom was beginning. Pat Westhoff, head of a University of Missouri think tank, joined Glauber in saying that the new farm income estimate, due on Thursday, might not include the bailout payments because of the deadlines involved in publishing the lengthy report.
“That’s the billion-dollar question,” said Glauber. “A lot of this should be paid out this year.”