WASHINGTON, D.C. — Though short on details and a timeline, the Trump administration said today that new payments will be coming to farmers to help with trade-war disruptions.
Cranberry growers can take heart in that cranberries have been added to the list of commodities covered. But for corn and soybean growers, new fine print raises more questions than answers.
U.S. Secretary of Agriculture Sonny Perdue said the new trade-mitigation package is larger than the 2018 package – $16 billion this year. Of that, $14.5 billion will go to producers – maybe. The payments will be made in three phases – late July to early August, late fall and a third might be in 2020. If at any point a trade agreement with China is reached, subsequent scheduled payments will not be made.
“It’s hard to see how a trade deal could be struck before the first payment,” said Bill Northey, Undersecretary for Farm Production and Conservation. “So the first one is more of a certainty this time.”
New package has three pieces
Market Facilitation Program for 2019
The program is authorized under the Commodity Credit Corporation Charter Act and administered by the USDA Farm Service Agency. It will provide $14.5 billion in direct payments to producers.
Non-specialty crops – Producers of alfalfa hay, barley, canola, corn, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long-grain and medium-grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, upland cotton and wheat will receive a payment based on a single county rate multiplied by a farm’s total plantings to those crops in aggregate in 2019. Those per-acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions. Moreover total payment-eligible plantings cannot exceed total 2018 plantings.
“This is not a market-loss payment,” Northey said. “This is a market-facilitation payment. It’s designed to help producers pay for storage and look for other flexibilities until there’s a new trade deal.”
Perdue was short on details in announcing the payments. The fine print indicates trade-disruption numbers for all covered non-specialty crops in a county will be gathered together. Those will then be averaged and divided by the number of planted acres in the county. That will be used to create one payment across all crops in that county. The concern is if some of those crops have had little trade disruption, the result could decrease the average and not reflect true trade disruptions for other greatly affected crops.
“We’re not releasing all those payment numbers now,” Northey said. “We have several different mechanisms in place. It will vary from county to county.”
Perdue said they are looking at a number of years of trade with China to calculate trade disruptions, not just 2017 as was done for the previous round of payments. He didn’t answer how many years, nor if that would make the payments more or less. They are also considering other trade-partner disruptions in calculating losses, in addition to China, including the European Union and Turkey. Mexico and Canada trade isn’t being considered.
“Ten months ago when the first trade-aid package was proposed, we said that while support is appreciated, the USDA cannot fully compensate producers for their losses. That hasn’t changed,” said Doug Rebout, Wisconsin Growers Association president, in response to the new payments. “Producers are dealing with so much uncertainty – from potential loss of markets to low commodity prices, tariffs and a wet spring – which has pushed back planting. This has all created a perfect storm. It’s not just a matter of whether to keep farming anymore. Producer suicide is a real concern. President Trump made promises to our producers and it’s time he lived up to them.”
Dairy and pork producers – Dairy producers will receive a per-hundredweight payment on production history. Hog producers will receive a payment based on hog and pig inventory for a later-specified time frame.
“We will choose an inventory range of time for pork, and will look at production for dairy,” Northey said. “It will be processed similarly to last year.”
No other details were given.
“There is no sugarcoating the fact that rising production costs, low milk prices and disrupted markets continue to inflict serious pain on our dairy farmers,” said Brody Stapel, president of Edge Dairy Farmer Cooperative and a dairy farmer in eastern Wisconsin. “So we welcome and appreciate this new financial assistance. But we also recognize that the aid will provide only partial and short-term relief for farmers, many who have been barely breaking even or operating at a loss for many months now.
“Our farmers are looking for the sort of long-term stability and success that can come when we have access to foreign markets for our dairy products. We much prefer trade over aid.”
FarmFirst Dairy Cooperative President John Rettler said, “We greatly appreciate the concern that the USDA has for U.S. dairy farmers as they discuss and prepare a trade-mitigation package during these trade discussions and tariff battles with China. While the previous mitigation had good intentions, it fell short on providing much-needed support to U.S. dairy farmers.
“It has been estimated that U.S. dairy farmers have lost $2.3 billion in revenues through March due to these higher tariffs, resulting in a negative impact on U.S. dairy prices. We encourage the USDA to use the resources available to them to provide meaningful support for U.S. dairy farmers as they continue to negotiate trade agreements that we hope will ultimately provide greater trade opportunities for U.S. dairy products.”
Specialty crops – Tree-nut producers, fresh-sweet-cherry producers, cranberry producers and fresh-grape producers will receive a payment based on 2019 acres of production.
“They will not have a blended rate,” Northey said. “It will be based on impact to that commodity (multiplied by) acres of production.”
No other deals were given.
Officials were clear that the payments are not intended to affect planting decisions.
“This year some producers are still making planting decisions.” Northey said. “We want to make sure folks have complete flexibility to plant what works for them. That will not be affected by this payment. Producers need to be planting for the market and their own agronomics.”
Food Purchase and Distribution Program
It will be administered through the USDA Agricultural Marketing Service, funded with $1.4 billion to purchase surplus commodities affected by trade retaliation — such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry and milk. The purchases will be distributed by the Food and Nutrition Service to food banks, schools and other outlets serving low-income individuals. It also will likely be split into three purchases.
“This is intended to clear inventory of products impacted by tariffs,” said Greg Ibach, Undersecretary for Marketing and Regulatory Programs. “We’re going to again be purchasing in phases like last time. We will match up purchases with the capacity of food banks, but plan to have a variety of products available to hungry people for a length of time. We will be introducing some people to a wide variety of food they might not have had access to before.”
Agricultural Trade Promotion Program
Administered by the USDA Foreign Agriculture Service, it will be funded with $100 million to assist in developing new export markets on behalf of producers.
The programs will not be paid by tariff revenue, Perdue said. But tariff revenue goes into the U.S. Treasury. Commodity Credit Corporation is funded from the treasury, he said, meaning the programs will be indirectly funded by tariffs.