Trade Aid Not a Solution

OMAHA (DTN) -- Leaders of farm groups on Thursday showed they have President Donald Trump's back as he offered them another $16 billion in federal aid in lieu of anticipated higher exports to China.

In response to the new Market Facilitation Program rolled out Thursday, farm groups offered praise to the Trump administration for helping offset export losses, but reiterated that a second consecutive year of trade aid is insufficient to make up for potentially years of lost trade revenue.

Farm groups praised the $16 billion in aid, though it is unclear exactly how much farmers will be paid individually. Payments will be based on all planted commodities in a county, yet USDA will only pay crop farmers based on a single county payment rate multiplied by a farm's total planted acres in 2019. The new MFP payments will be limited to the total amount of eligible acreage a farmer planted in 2018.

The payment rates will vary in every county, but USDA is not releasing those payment rates at this time. Payments will be broken down into as many as three tranches. The first set of payments could go out as early as July or August after farmers have provided Farm Service Agency with their crop-reporting data, which is due July 15.

American Farm Bureau Federation President Zippy Duvall, who stood by Trump during an event Thursday at the White House, called the latest round of aid "a welcome relief to an economic sector that has been battered by foreign competitors and retaliatory tariffs."

"We thank the president for living up to his commitment to stand by our farmers and ranchers," Duvall said. "While farmers and ranchers would rather earn their income from the marketplace, they have been suffering during the agricultural downturn and trade war. This aid package will help us weather the storm as the administration works to correct unfair trade practices that have hurt the U.S. economy for too long."

However, Duvall added that a "real, long-term solution to our challenges in agriculture is good outcomes to current negotiations with China, Japan and the European Union, as well as congressional approval of the U.S.-Mexico-Canada Agreement. America's farmers and ranchers need fair and open access to markets."

National Farmers Union was pleased USDA is covering a broader range of commodities than it did in the first MFP. At the same time, NFU noted that basing payments on 2019 planted acres "fails to help those who have faced or are facing impossible planting conditions."

NFU President Roger Johnson said: "Ultimately, this package is only a short-term fix for a very long-term problem. Farmers rely on markets to make a living. Our ongoing trade wars have destroyed our reputation as a reliable supplier and have left family farmers with swelling grain stores and empty pockets. The very least we can do is provide our country's struggling food producers with the certainty of a longer-term plan that also addresses the persistent and pernicious problem of oversupply."

Davie Stephens, president of the American Soybean Association and farmer from Clinton, Kentucky, said soybean farmers appreciate that President Trump understands their plight and has looked for ways to ease the burden.

"But, farmers are resolute that the only real solution is to take away the tariffs that have hemorrhaged our sales and landed our relationship with China on life support," Stephens said.

Stephens added that the soybean industry needs open trade access. "The key word from today's announcement is 'facilitation.' Trade assistance will only facilitate soy growers' ability to farm, not make their losses whole or tariff woes disappear long term. Trade assistance will only help in the short term."

Though the payment program will be based on a new county formula for crops, National Corn Growers Association called on USDA to update MFP to consider its view that corn farmers lost an average of 20 cents a bushel from trade from over the past year. The spread recently has widened to closer to 40 cents a bushel, NCGA stated.

NCGA is also encouraging additional actions the administration could take to open markets and provide more certainty to corn farmers, including stopping Renewable Fuel Standard waivers to big oil refiners and restoring waived ethanol gallons as well as resolving trade disputes and tariffs.

Ben Scholz, president of the National Association of Wheat Growers and Lavon, Texas, farmer, said wheat growers appreciate the new mitigation program, but it does not make farmers whole.

"The U.S. exports 50% of its wheat, which means we need a long-term solution," Scholz said. "This includes getting the U.S.-Mexico-Canada Agreement (USMCA) across the finish line, completing negotiations with China and supporting our WTO case, and closing a trade deal with Japan."

Scholz said NAWG will work with the Trump administration and USDA on "a relief strategy to ensure that the program works best for wheat farmers."

Mike Tate, chairman of the National Cotton Council and an Alabama farmer, said this round of assistance, like the first one initiated in 2018, will help partially mitigate the impacts of retaliatory tariffs being placed on U.S. raw cotton to China. He said the cotton industry will look to the administration for other avenues of assistance.

"While our industry is very thankful for this assistance, we strongly encourage the administration to engage in constructive dialogue with China to address unfair trade practices and barriers," Tate said. "China traditionally has been U.S. cotton's top export destination. Resolution of the current trade tensions remains our top priority."

Under last year's MFP, commodity export groups received $200 million for trade promotion programs.

Tom Nassif, president and CEO of Western Growers, said his group was disappointed USDA had cut the trade program in half for commodity export groups, "despite the fact that it was massively oversubscribed during the last round of trade assistance. As a silver lining, we see this situation as an opportunity to open up new markets for American agricultural products in other parts of the world."

Nassif added that the current aid package remains "insufficient to make the industry whole.

"Indeed, it will take American farmers many years, if ever, to recover from the lost trade revenues and, more importantly, lost markets that have resulted from the continuation of trade disruptions with China."

The dairy package will provide farmers a payment based on recent production. National Milk Producers Federation President and CEO Jim Mulhern said the industry knows USDA is concerned about the damage being done to dairy farmers and called on the first tranche of payments to be "a large segment of the payment" to producers.

"We appreciate USDA's concern for dairy's needs, and we look forward to working with USDA, Congress and the White House as the department further develops its plans," Mulhern said.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(AG/KD)

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