U.S. ag exports have gained limited traction from President Trump's ballyhooed trade victories, but Agriculture Secretary Sonny Perdue is optimistic that demand will improve. "I hope we can show that a third round [of trade war payments] is not needed for 2020," Perdue said in a statement. "We still believe farmers want trade rather than aid."
Although ag bankers in the Midwest and Plains say the administration's multibillion-dollar trade war payments were a boon to farmers and ranchers, some lenders are still concerned about underlying weaknesses in the sector.
This week's White House budget proposal to cut crop insurance by 31 percent and to tighten eligibility rules for farm subsidies would save less in 10 years than the administration spent to mitigate the impact of the Sino-U.S. trade war on 2018 and 2019 farm production, said an economist.
The chairman of the Farm Credit Administration appealed for Farm Belt patience on Trump trade agreements on Wednesday. "The groundwork has been laid for trade normalization and improved farm prices," said Glen Smith during a House Appropriations subcommittee hearing.
Farmers and ranchers are on their way to receiving $14.5 billion in trade war payments on their 2019 production, but that aid is skewed toward large farms and Southern states, said the senior Democrat on the Senate Agriculture Committee on Thursday.
Thanks to a steady recovery, U.S. farm income this year will be the highest since 2013, the peak of the commodity boom, said the government on Wednesday. The USDA forecast net farm income, a broad measure of profits, at $96.7 billion this year, with higher crop and livestock revenue offsetting the end of two years of mammoth Trump tariff payments.
At the same time he saluted the de-escalation of the Sino-U.S. trade war, Agriculture Secretary Sonny Perdue announced on Monday the release of $3.6 billion in trade-war payments to farmers and ranchers. The money will raise the total for Trump tariff payments to producers to mitigate the impact of retaliatory tariffs on 2019 production to $14.5 billion.
President Trump employs a policy of “aggressive unilateralism” that views agriculture’s trade war losses as collateral damage that can be mitigated by a multibillion-dollar bailout, say the authors of a paper on the 2020 presidential race. The paper says Michael Bloomberg is “perhaps the strongest supporter of free trade among the various Democratic candidates” while Sens. Bernie Sanders and Elizabeth Warren “are the most protectionist.”
As President Trump scored his second trade victory in two days, Senate approval of the United States-Mexico-Canada Agreement, he asked farmers on Thursday to remember the billions of dollars they had received in trade war payments.
Agricultural lending declined during the second half of 2019, and while that reflected lower production costs, it “likely also was due to an increase in revenue from government payments (Market Facilitation Program) connected to trade disputes that lingered through the year,” said the Federal Reserve on Thursday.