President Donald Trump announced Friday via Twitter that he is open to doling out billions of dollars in a third trade assistance package for farmers because of implementation delays in trade deals such as the "phase one" pact with China.
“If our formally targeted farmers need additional aid until such time as the trade deals with China, Mexico, Canada and others fully kick in, that aid will be provided by the federal government, paid for out of the massive tariff money coming into the USA!” Trump said in an all-caps tweet.
The comment follows an updated trade forecast issued by the Agriculture Department on Thursday. USDA estimated that farm commodity exports to China would increase by only $4 billion in fiscal 2020 to $14 billion and that total U.S. ag exports would rise by the same amount, $4 billion, to $139.5 billion. The fiscal year ends Sept. 30.
If the forecast is correct, there would have to be a dramatic surge in shipments in the later part of the year to China to reach the level that the Chinese pledged to buy in the "phase one" trade agreement: $36.5 billion for the calendar year.
Agriculture Secretary Sonny Perdue was asked Thursday about whether there would be new Market Facilitation Program payments this year and responded, “Probably not.”
He said that even though it appeared that, because of the coronavirus outbreak that has snarled ports, shut down processors and impacted domestic transportation, China would be delayed in making billions more in ag purchases as part of the "phase one" agreement, that increased trade would be coming soon.
“I’m not advising any farmers to expect Market Facilitation Program payments,” Perdue said. “They’ve got to farm for the market and what it’s telling them and what their capabilities are from a production perspective.”
The Trump administration committed $28 billion over the past two years to help farmers cope with reduced sales during the U.S.-China trade war and other tariff damage. The aid came mostly from direct MFP payments, but also included government commodity purchases and funds to boost international marketing.
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USDA sources told Agri-Pulse they had gotten no instructions to put together a 2020 aid package but that the department could do so quickly.
That sentiment was echoed by USDA Trade Undersecretary Ted McKinney in a brief interview with Agri-Pulse.
“Thank goodness the president has continued to stand behind the American farmer and ranchers given that some of these trade agreements take time to be implemented,” said McKinney, who noted that Trump’s statement did not necessarily mean there will be more payments – just that he wants USDA to be ready in case they are. “Our goal is to get these agreements active and make them such that we don’t need that mitigation program, but it’s great to have a backstop like that for whatever reason.”
It’s not clear that USDA can provide payments as big as it did for 2018 and 2019 without action by Congress. While USDA doesn’t need legal authority to make the payments, it does need sufficient borrowing authority through the Commodity Credit Corp. to spend the money.
Congress last refreshed USDA’s CCC Section 5 limit through a continuing resolution that lawmakers passed in September 2019 to fund the government temporarily into the new fiscal year. House Agriculture Committee Chairman Collin Peterson said recently that a similar appropriations bill will need to be passed in order for USDA to make another round of MFP payments.
A spokeswoman for Sen. John Hoeven, the North Dakota Republican who chairs the Senate Agriculture Appropriations Subcommittee, tells Agri-Pulse that lawmakers need to get an estimate from USDA of how much the department has spent of its existing authority before determining whether the limit needs to be refreshed.
Philip Brasher contributed to this story
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