As it did with the Trump tariff payments on 2018 crops, the administration is likely to send money directly to producers in the upcoming round of aid, which may total $15-$20 billion, said Agriculture Secretary Sonny Perdue on Wednesday. That total would be a larger package than the president himself has suggested. Overseas donation of U.S. commodities, Perdue said, “may be part of that.”
“We are assuming it will contain direct payments for commodities,” said Perdue during a teleconference from South Korea. He said it was too early to discuss which commodities would see compensation or what the payment rates would be. “We are operating conceptually,” said Perdue, adding that the USDA will listen to stakeholders.
Trade mitigation could range from $15-$20 billion, drawn from tariff receipts and funneled through the USDA, said Perdue. Asked if the aid would make up for lost trade, he replied, “I believe it will.”
Earlier this week, President Trump, in response to the impasse in negotiations to resolve the Sino-U.S. trade war, suggested $15 billion as a possible figure for the farm bailout, with foreign food aid the package’s major component. U.S. farm exports are forecast to dip slightly due to the trade war. The USDA’s estimate of farm-gate prices for this year’s corn, soybeans, and wheat crops has worsened since late winter.
“Times are tough for farmers. More tariffs won’t help; neither will another penny-per-bushel trade assistance payment,” said Lynn Chrisp, president of the National Corn Growers Association. Wheat and dairy groups also have complained of being shortchanged by the 2018 package. Still other producers — canola is one example — say they were excluded from the 2018 program although their crops suffered, too. A crowd of so-called commodity groups wants a wider and, in their view, more equitable distribution this time.
Going a step further, the National Farmers Union, the second-largest U.S. farm group, said the USDA should “address the growing problem of oversupply by providing farmers with incentives to reduce overall production.” The United States has not used those sorts of tools since the 1996 “freedom to farm” law removed most federal controls over what farmers grow.
In large part, farmers have supported Trump in his policy of confrontation to force China to reform its trade practices. But some leaders say the sector is weary of tit-for-tat tariffs that spook the market and jeopardize farm income, already suffering from the 2014 collapse of the commodity boom.
“U.S. farmers and ranchers now face a third wave of tariff increases by China,” said president Zippy Duvall of the American Farm Bureau Federation, the largest U.S. farm group. An aid package will keep farmers in business, Duvall said, but the real solution is open markets. “We ask that your trade negotiators make a deal as soon as possible to end the tariffs.”
Nearly $10 billion has been spent out of the $12 billion earmarked for trade assistance last year, according to the USDA. Some $8.52 billion has been sent to 600,000 producers, and Illinois, Iowa, Kansas, Nebraska, and Indiana are the top states for payments. The deadline for submitting documentation for payment claims is Friday. An additional $1.2 billion is being spent to buy and donate surplus commodities. In addition, the USDA awarded $200 million in grants to develop new overseas markets for U.S. crops.
The trade war will be a factor in the 2020 elections, said Iowa Sen. Chuck Grassley on Tuesday. “So far, I haven’t seen farmers abandoning Trump.”