tariff payments

If there is no near-term resolution of the Sino-U.S. trade war, the Trump administration will need to spend billions of dollars in additional trade war payments to farmers and ranchers or watch farm income sink, said two economists on Monday. Either way, there would be painful restructuring in the sector, which has collected more than $10 billion in Trump tariff payments this year.

Fueled by $14.5 billion in Trump tariff payments, U.S. net farm income will climb to its highest total since the commodity boom crested in 2013 and a dramatic rebound from the plunge that accompanied its collapse, the USDA estimated. When crop insurance indemnities are added to "direct farm program payments," a category that includes trade war aid, land stewardship payments and traditional crop supports, the government will provide an unusually high 31 percent of farm income this year.

As lawmakers become more vocal in criticizing Trump tariff payments, U.S. farm groups  increasingly are quiet on trade issues. The reasons range from weariness to uncertainty over what's to come, whether it's the Sino-U.S. trade war, congressional approval of the USMCA with Canada and Mexico, or implementation of new ag trade rules with Japan, say analysts and farm group officials.

With the Sino-U.S. trade war unresolved, the Trump administration released $3.625 billion in trade-war payments to farmers and ranchers on Friday to offset losses on 2019 production. Payments will begin this week and Agriculture Secretary Sonny Perdue said they "will give farmers, who have had a tough year due to unfair trade retaliation and natural disasters, much needed funds in time for Thanksgiving.”

Farmers can expect a cash injection of billions of dollars in Trump tariff payments later this month or in December, said Agriculture Secretary Sonny Perdue on Thursday. “We hope that trade will supplant the need for aid in 2020,” he said, pointing to progress in negotiations to resolve the Sino-U.S. trade war.

Although farmers and ranchers overwhelmingly believe they will emerge as winners from the Sino-U.S. trade war, they also expect the Trump administration will send them billions of dollars in trade-war payments on 2020 crops yet to be planted, according to a Purdue University poll released Tuesday.

Ahead of high-level Sino-U.S. trade talks, President Trump said on Monday that “I would much prefer a big deal” that would end the trade war, while at the same time touting the billions of dollars that farmers are receiving to mitigate the impact of lost exports.

Floods and crop-delaying rains in the Midwest generated a lot of attention, but the hurricane-hit U.S. Southeast will see the bulk of the $3 billion allocated by Congress for agricultural disaster relief, said Agriculture Undersecretary Bill Northey on Thursday.

With USDA sending $1 billion a week to farmers, senior Democrats on the House Agriculture Committee argued on Monday for Congress to give USDA an early infusion of cash to keep trade-war payments flowing to farm country. The House is scheduled to vote this week on a short-term government funding bill that may include money for aid to agriculture, the only sector of the U.S. economy to get a trade-war bailout.

A veritable footnote in the $4 trillion federal budget could become a top-line issue this week in the debate between lawmakers and the administration over government funding. House Democrats might refuse to provide money for the obscure USDA agency that has sent billions of dollars in cash to farmers and ranchers to mitigate the impact of the Sino-U.S. trade war.