With no end in sight for the trade war, the Trump administration will begin a second, multibillion-dollar round of payments to soybean, cotton, pork, dairy, sorghum, wheat and corn producers by the end of the year, said Agriculture Secretary Sonny Perdue on Monday. The administration does not plan a 2019 bailout.
“I can confirm there will be a second tranche,” Perdue told reporters at nearly the same time the White House declined to say if President Trump would impose an additional $257 billion in tariffs on Chinese imports in December.
Three sources told Bloomberg that the tariffs would be announced if a meeting between Trump and Chinese President Xi Jinping at the G-20 meeting is unproductive. “I’m not going to get ahead of the president’s meeting, and I hope it goes well,” said White House press secretary Sarah Sanders.
Soybean growers were in line for the lion’s share, or $3.6 billion, of the $4.7 billion that USDA earmarked for crop and livestock producers to offset the impact of retaliatory tariffs by U.S. trading partners, including China, Canada, Mexico and the EU in response to steep U.S. duties on imported steel and aluminum. Formerly the top market for U.S. farm exports, China also imposed duties on an array of U.S. products, including farm exports, because of U.S. duties on its high-tech industry.
“Again, we are continuing to look at market conditions. We are discussing this really as we speak,” said Perdue when asked about the second round. He said the new round of farmer payments would not be later than December.
The dairy industry has called on the administration to adjust payment rates for the second round. The USDA set a dairy payment rate equal to a penny a gallon for payments that began in September. Corn and wheat growers have said their payment rates were also unfairly low at 1 cent a bushel for corn and 14 cents a bushel for wheat.
Perdue said there are no plans for more payments next year. “Farmers are very resilient,” he said, and will decide their production plans for the new year “without the expectations of a market facilitation program.”
Meanwhile, over the weekend Trump said “we don’t have enough votes” in Congress now to pass a farm bill with stricter work requirements for SNAP recipients. Perdue said it wasn’t his place to tell the “four corners” — the lead Senate and House negotiators on the bill — whether to go ahead without the work requirements this year or to start again next year. “They will make the best decisions that can pass both houses for a farm bill.” Trump wants new or stronger work requirements for all social programs.
The USDA will release its projections for 2019 crops and the underlying farm economy on Friday. The trade war has hobbled soybean exports and added to arguments that U.S. farmers will return to corn as their primary crop in 2019 after making soybeans the most widely grown crop in the nation this year. A record crop of nearly 4.3 billion bushels will boost soybean stocks to their largest size ever and pull down prices in the year ahead, according to USDA estimates.
When the administration announced the bailout payments just before Labor Day, it said an additional $1.2 billion would be spent to buy, and give away, surplus food and $200 million would go to market development overseas. A USDA official said at the time that a repetition of the food purchase or the markete development grants was not expected.
President Trump is highly popular in rural America and there is support in farm country for his policy of trade confrontation. All the same, seven of 10 farmers in a recent Purdue University poll said the trade war will reduce their income this year. An equally large portion expected hard times in the year ahead.