The Department of Agriculture today announced details for roughly half of the long-awaited $12 billion aid package of payments and market support to help producers impacted by ongoing trade disputes with China, Mexico, the European Union, Turkey and other countries.
The roughly $6.3 billion worth of assistance rolled out by USDA includes just half of the potential direct payments (about $4.7 billion) for producers of soybeans, corn, wheat, cotton, sorghum, dairy and pork.
It also includes all of the roughly $1.4 billion worth of apples, pears, apricots, blueberries, beef, oranges and many other commodities that USDA plans to purchase off the market and donate to feeding programs. Also included is $200 million for the Agricultural Trade Promotion Program, which is aimed at helping expand and create foreign markets.
The White House Office of Management and Budget authorized the entire $12 billion for the aid package, but USDA Chief Sonny Perdue explained that only half of the direct payment portion – the Market Facilitation Program – will be released “so that we can monitor and factor in other events.” An announcement about the other half of the payments will be made “in the coming months if warranted,” he added.
The USDA will re-evaluate the trade situation with China and other countries in December to make a new decision on the potential second tranche of payments. If deals have been cut to end tariffs, that could drastically affect the level of payments, the official said.
Soybean growers will be some of the biggest beneficiaries of the package, receiving a payment of $1.65 per bushel, as Agri-Pulse previously reported. But that amount is essentially cut in half for the first half of the payments, which will total about $3.6 billion for soybeans. If the Trump administration decides in December that the trade environment is still damaging to farmers and ranchers, another $3.6 billion could be paid out.
That will be a much-needed boost, said American Soybean Association President John Heisdorffer.
“We welcome USDA’s announcement that soybean farmers will receive a payment on their 2018 production to partially offset the impact of China’s tariff on U.S. soybean imports,” he said. “This will provide a real shot in the arm for our growers, who have seen soybean prices fall by about $2 per bushel, or 20 percent, since events leading to the current tariff war with China began impacting markets in June.”
USDA today also announced payment rates for other commodities. The rates are multiplied by half the production on a farm for the initial payment:
- Wheat: 14 cents per bushel
- Sorghum: 86 cents per bushel
- Cotton: 6 cents per pound
- Corn: 1 cent per bushel
- Dairy: 12 cents per hundredweight
- Hogs: $8 per head
Not all farm groups were as pleased as ASA, though. The 14 cents per bushel isn’t nearly enough assistance for wheat farmers, said National Association of Wheat Growers President Jimmie Musick.
“About half of all U.S. wheat is exported, making new trade deals and establishing new global markets, a priority for all wheat farmers,” he said. “As a result of the tariffs, China hasn’t purchased any wheat from the United States since March. Further, we estimate that the ongoing trade war will cause a 75 cents a bushel price decrease and a reduction in global wheat production.”
The National Corn Growers Association said the aid plans "would be insufficient to even begin to address the serious damage done to the corn market because of the (Trump) Administration’s actions." NCGA "reiterated its call for the administration to rescind tariffs, secure trade agreements and allow for year-round sales of higher blends of ethanol; no-cost actions that would allow for the marketplace to drive demand."
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The corn growers said an association-commissioned analysis, which NCGA shared with USDA and the Office of Management and Budget, concludes that trade disputes "are estimated to have lowered corn prices by 44 cents per bushel for crop produced in 2018," 43 cents more than the payment rate for corn under USDA's aid plan. The 44-cent-a-bushel price drop "amounts to $6.3 billion in lost value on the 81.8 million acres projected to be harvested in 2018," NCGA said.
The U.S. dairy industry also announced its disappointment.
“The dairy-specific financial assistance package provided by USDA – centered on an estimated $127 million in direct payments – represents less than 10 percent of American dairy farmers’ losses caused by the retaliatory tariffs imposed by both Mexico and China,” National Milk Producers Federation President and CEO Jim Mulhern said. “The price drop resulting from these tariffs has not been gradual – it’s hurting U.S. dairy producers right now and will continue to do so.”
But dairy will also get a boost from the Food Purchase and Distribution Program. USDA is committed to buying up $84.9 million worth of product from the market. That will come on top of a separate USDA plan announced earlier this month to buy $50 million worth of fluid milk.
Tom Sleight, president and CEO of the U.S. Grains Council, lauded the Agricultural Trade Promotion Program, stressing that it would “offer a unique and timely opportunity to unleash creative, new approaches to existing markets and enhance the exploration of untapped, new markets across the globe for U.S. corn, sorghum, barley and their co-products, including ethanol and (Distiller's Dried Grains).”
Producers can apply for direct payment assistance through local Farm Service Agency offices beginning after Labor Day.
While generally appreciative of the assistance, farm groups also stressed that producers would much prefer the trade wars to end.
“The USDA aid package is appreciated, and it will begin to help many of those that are suffering the brunt of the retaliation from China and other trading partners,” said Rob Larew, a senior vice president with the National Farmers Union. “But our family farmers and ranchers need strong markets and long-term certainty.”
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