The initiative includes market facilitation, food purchase, distribution and trade promotion programs.
The programs are intended to be short-term in an effort to give the administration time to establish long-term trade policy and deals, said Sonny Perdue, US secretary of agriculture in a conference call.
“Today we’re formally announcing that the Trump administration will be taking several actions to assist farmers in response to the trade damage caused by the illegal retaliatory tariffs that have been imposed on the US in recent months,” he added.
“America’s hard-working agricultural producers have been treated unfairly by illegal trade practices by China and other nations for a while and have taken a disproportionate hit when it comes to illegal retaliatory tariffs,” he said on the call.
“President Trump has got China’s attention like never before, and the programs that we’re announcing today are a firm statement that other nations cannot bully our agricultural producers to force the US to cave in.”
Support package overview
The USDA is authorizing up to $12bn to pay for the three programs, said Perdue. The amount is in response to the estimated $11bn damage the sector could sustain from the tariffs.
“These programs will help agricultural producers meet the cost of disrupted markets,” he said.
It is unclear at this point when exactly the programs will open for enrollment, according to the USDA. However, more details are set to be published and some of the payment plans are expected to start after the crop has been harvested.
“This is a short-term solution that will give President Trump and his administration time to work on long-term trade details to benefit agriculture and all sectors of the economy,” he added.
The first program is set to provide incremental payments to producers working with specific crops or livestock and is intended to help producers manage the disrupted markets, expand new markets and address commodity surplus, said Perdue. The producers covered include growers of soybeans, sorghum, corn, wheat and cotton along with dairy and hog farmers.
The second program will purchase surplus amounts of some commodities that can be sent to food banks or other nutrition programs, he said. The focus of the program will be commodities like nuts, rice, legumes, fruit, beef, pork and dairy.
“The third program, and final program, will be the trade promotion program, to assist in conjunction with the private sector, in developing new export markets on behalf of producers,” he said.
It is unclear, at this point, what the imposition of additional tariffs would mean for these plans, though.
Grower reaction
The American Soybean Association (ASA) said soybean growers appreciated the recognition tariffs have lowed exports and dropped prices, but the proposed plan only offers short-term assistance.
The ASA is interested in finding a long-term strategy, including a plan to remove the tariffs, to reduce the growing surplus of soybeans and ongoing low prices, it said in a statement provided to us.
“Our best course of action is to expand other markets and develop new ones to buy the soybeans we’re not selling to China,” said John Heisdorffer, ASA president. “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.”
Soybean producers are looking for a near-record harvest this fall and exports are forecast to be down 11%, the ASA said.
ASA members have consistently advised the administration that increasing exports is the best way to lower the trade deficit, said Heisdorffer. “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.”
Members of the National Sorghum Producers also said they appreciate the work that Perdue and US officials have been doing to support farmers through the ongoing trade issues.
“We respect the administration for following through with their promise to stand by US farmers, and we look forward to working with Secretary Perdue in providing much-needed funds to sorghum farmers and other producers impacted by tariffs,” said Dan Atkisson, National Sorghum Producers Legislative Committee chairman and board director in a statement provided to us.
“NSP fully supports fairer and open trade and will continue to work with officials to achieve long-term trade solutions. US sorghum farmers have faced tremendous uncertainty since February 2018, and this program will lessen some of that uncertainty and provide relief in rural America.”
Members with the National Corn Growers Association said that corn farmers would prefer to rely on markets instead of an aid package.
“The fine print will be important,” said Kevin Skunes, NCGA president. “We look forward to working with USDA on the details and implementation of this plan.”
The association continues to call for the administration to rescind the section 232 and 301 tariffs, finish the NAFTA renegotiations, establish new trade agreements and implement the Renewable Fuel Standard as intended, he said.
“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,” he said.