USDA outlines farmer aid plan
July 24, 2018
The Agriculture Department has posted some details about the programs it intends to use to provide up to $12 billion in emergency aid to farmers affected by tariff increases from other countries in reaction to President Donald Trump's trade policies. Farm groups expressed appreciation for the short-term aid, while calling for long-term solutions.
"High tariffs disrupt normal marketing patterns, affecting prices and raising costs by forcing commodities to find new markets," the USDA said in its news release explaining the program.
"Additionally, there is evidence that American goods shipped overseas are being slowed from reaching market by unusually strict or cumbersome entry procedures, which can affect the quality and marketability of perishable crops. This can boost marketing costs and discount our prices, and adversely affect our producers."
USDA said it would use the following existing programs to assist farmers:
“President Trump has said he has the back of U.S. farmers and today demonstrated this commitment with an aid package to sustain American agriculture cutoff from critical export markets as his administration works to realign U.S. global trade policy.” Jim Heimerl, National Pork Producers Council president
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▪ "The Market Facilitation Program, authorized under The Commodity Credit Corporation (CCC) Charter Act and administered by the Farm Service Agency, will provide payments incrementally to producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs. This support will help farmers manage disrupted markets, deal with surplus commodities, and expand and develop new markets at home and abroad.
▪ "Additionally, USDA will use CCC Charter Act and other authorities to implement a food purchase and distribution program through the Agricultural Marketing Service to purchase unexpected surplus of affected commodities such as fruits, nuts, rice, legumes, beef, pork and milk for distribution to food banks and other nutrition programs.
▪ "Finally, the CCC will use its Charter Act authority for a Trade Promotion Program administered by the Foreign Agriculture Service in conjunction with the private sector to assist in developing new export markets for our farm products."
"This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy," Agriculture Secretary Perdue said.
"The president promised to have the back of every American farmer and rancher, and he knows the importance of keeping our rural economy strong," Perdue said. "Unfortunately, America's hard-working agricultural producers have been treated unfairly by China's illegal trading practices and have taken a disproportionate hit when it comes illegal retaliatory tariffs."
Trade damage from tariff retaliation has impacted a host of U.S. commodities, USDA said, including soybeans and sorghum, milk and pork, and many fruits, nuts, and other specialty crops.
Farm group reactions
American Farm Bureau Federation President Zippy Duvall said: "This should help many of our farmers and ranchers weather the rough road ahead and assist in their dealings with their financial institutions."
"We are grateful for the administration's recognition that farmers and ranchers needed positive news now and this will buy us some time. This announcement is substantial, but we cannot overstate the dire consequences that farmers and ranchers are facing in relation to lost export markets.
"Our emphasis continues to be on trade and restoring markets, and we will continue to push for a swift and sure end to the trade war and the tariffs impacting American agriculture."
The National Farmers Union (NFU) "urged the administration to do more to provide a long-term fix to the long-term damage of the trade war."
"The group supports the president's efforts to improve fair trade relationships with trading partners, yet has grown weary of the administration's go-it-alone, bull-in-a-china-shop approach," NFU said in a statement.
NFU President Roger Johnson said "President Trump's escalating trade war with China and much of the rest of the world requires that we go to significant lengths to protect the men and women who grow our food, fuel and fiber."
"Their livelihoods are on the line with every tweet, threat or tariff action that comes from the White House. Market prices for farm products are plunging from already very low levels, and it's been estimated that farmers lost more than $13 billion last month alone due to trade disruptions.
"While we appreciate the move to provide stopgap assistance, this plan is a short-term fix to a long-term problem. The administration must develop a support mechanism that will mitigate the significant damage that is being inflicted upon our most vital international markets for years to come.
"They should do this by working with Congress to ensure farm bill programs provide enough assistance to farmers when markets collapse."
The American Soybean Association said it hopes the aid plan is "step one in a long-term tariff solution."
"The president has vowed for weeks that he would 'take care' of farmers, but the American Soybean Association and other agriculture groups did not know until today what that help would look like," the group said.
"While soybean growers appreciate the administration's recognition that tariffs have caused reduced exports and lower prices, the announced plan provides only short-term assistance. ASA continues to call for a longer-term strategy to alleviate mounting soybean surpluses and continued low prices, including a plan to remove the harmful tariffs."
ASA said U.S. soy prices have dropped more than $2 per bushel since the tariff-war talks with China became serious in late May.
John Heisdorffer, ASA president and soybean grower from Keota, Iowa, stated, "Our best course of action is to expand other markets and develop new ones to buy the soybeans we're not selling to China."
"This means finishing the NAFTA negotiations as soon as possible so we can begin talks on new bilateral agreements with other key soybean markets including Japan, Vietnam, Indonesia and the Philippines.
"The American Soybean Association has consistently advised the administration that the best way to reduce our nation's trade deficit is by increasing exports, including of agricultural products," Heisdorffer stated.
"Since the administration has decided to use tariffs to address trade concerns with China, and China has retaliated, farmers don't have time to wait to see how this trade war turns out."
ASA said soybean farmers are facing an urgent situation this fall, with a near-record harvest expected and exports predicted to be down by 11 percent next year.
National Corn Growers Association President Kevin Skunes, a North Dakota farmer, said "NCGA appreciates the administration's recognition of the harm to producers caused by tariffs and trade uncertainty."
"The fine print will be important. We know the package won't make farmers whole but look forward to working with USDA on the details and implementation of this plan.
"NCGA's grower members are confronting their fifth consecutive year of declining farm incomes while facing high levels of uncertainty due to ongoing trade disputes and disruptions in the ethanol markets. Corn farmers prefer to rely on markets, not an aid package, for their livelihoods.
Skunes said NCGA will continue to advocate for administrative actions including:
▪ Rescinding the section 232 and 301 tariffs;s
▪ Securing NAFTA's future;
▪ Entering new trade agreements;
▪ Allowing for year-round sales of higher ethanol blends such as E15;
▪ and implementing the Renewable Fuel Standard as intended.
"We believe these additional actions, which would come with no cost, would result in stronger market demand for farmers."
National Milk Producers Federation President and CEO Jim Mulhern said "We appreciate the president following through on his pledge that America's farmers won't bear the brunt of the economic losses generated by the current trade conflicts."
"Today's announcement reflects requests that our organization has made of USDA to relieve some of the financial pain dairy farmers are feeling due to lost export opportunities."
The NMPF estimates tariff increases will cost U.S. dairy farmers $1.8 billion just through the remainder of the year, based on the decline in milk futures prices since the retaliatory tariffs were implemented.
NMPF is also encouraging the administration to conclude the North American Free Trade Agreement (NAFTA) negotiations and pursue new trade opportunities, "which is the long-term solution to the current situation. We need this assistance for now, but we also need new trade deals that allow our farmers to reach customers in other nations," Mulhern said.
National Pork Producers Council President Jim Heimerl, a pork producer from Johnstown, Ohio, said "President Trump has said he has the back of U.S. farmers and today demonstrated this commitment with an aid package to sustain American agriculture cutoff from critical export markets as his administration works to realign U.S. global trade policy."
"U.S. pork, which began the year in expansion mode to capitalize on unprecedented global demand, now faces punitive tariffs on 40 percent of its exports. The restrictions we face in critical markets such as Mexico and China — our top two export markets by volume last year — have placed American pig farmers and their families in dire financial straits. We thank the president for taking immediate action.
"While we recognize the complexities of resetting U.S. trade policy, we hope that U.S. pork will soon regain the chance to compete on a level playing field in markets around the globe. We have established valuable international trading relationships that have helped offset the U.S. trade deficit and fueled America's rural economy."
–The Hagstrom Report