Aid Won't Make Farmers Whole

Secretary Perdue Cautions Against Expectations of Large Payments Based on Price Declines

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Agriculture Secretary Sonny Perdue elaborated a little more Monday with reporters on a trade aid package that should be rolled out in late August or September. He cautioned against expectations of large checks due to price declines. (Logo and photo courtesy of USDA)

OMAHA (DTN) -- Agriculture Secretary Sonny Perdue reiterated Monday that any aid checks to producers this fall likely won't make farmers financially whole, and USDA won't attribute every drop in commodity prices solely to trade complications.

Perdue held a call with reporters Monday following the G20 agricultural ministerial talks in Argentina that wrapped up during the weekend. G20 agricultural ministers largely criticized trade barriers and agreed reforms are needed in the World Trade Organization.

Perdue headed to the G20 meeting shortly after announcing the Trump administration was working on details of an aid package for farmers affected by tariffs of up to $12 billion that included direct payments to producers of some commodities.

Reuters reported during the weekend in an interview with Perdue at the G20 meeting that the White House plan would expect to include between $7 billion and $8 billion paid out to the major commodities detailed last week, which include soybeans, corn, sorghum, wheat, cotton, milk and hogs.

Perdue reiterated to reporters Monday that the checks won't make farmers financially whole. "That's been consistent to what we have said all along," Perdue said. "I liken it really to any kind of insurance claim." The secretary compared it to a situation such as a car accident or home destroyed where a person never feels "whole" when the check comes.

Perdue said USDA's chief economist has models that can differentiate the impact of trade disruption from normal seasonal price volatility for a given crop.

"I think we're just trying to make the expectation that if a farmer sees a $2 drop in soybean prices, then they should not necessarily expect a $2-per-bushel mitigation payment. I think that's what we're trying to say."

One of the reasons details about the disaster payments may not come until late August is USDA officials are waiting to see if some of these trade battles are resolved between now and then and prices rally, Perdue said.


Regarding the talks in Argentina, Perdue said he and others had "productive conversations" with EU officials about following up on the announcement last week at the White House about opening up trade and buying more U.S. agricultural products. Perdue acknowledged the commitments made last week need to be filled not only for soybeans, but other U.S. products, even though EU officials don't control private enterprises that buy agricultural commodities.

"I'm hoping they will fulfill their commitment in stepping up and buying more U.S. soybeans and replace some of the export volume that would be lost to China," Perdue said.

A European Union spokeswoman seemed to back off some of the statements made at the White House about agricultural sales, but Perdue said the announcement between President Donald Trump and EU Commission President Jean-Claude Juncker definitely included agricultural trade.

"While they love for agriculture to be outside the scope, it's very much in our interest to address that with the EU, particularly the non-tariff barriers they continue to promulgate," Perdue said.

The G20 agricultural ministers also had a conversation about the EU's push on geographical indications (GI). Perdue said the EU is trying to block what have become common food names over the past 100 years or more because of European immigrants. Perdue cited cheeses such as "feta" and mozzarella" as a couple of examples, though the EU has hundreds of food items it seeks to brand in trade deals as geographically restricted that come from particular regions of Europe.

"The EU all of a sudden over the past few years wants to trademark or patent those names so we can't use them," Perdue said.

EU officials noted in their trade agreement with Japan that more than 200 EU agricultural products would receive GI protection once the EU and Japan trade deal begins. Perdue challenged the need for such protections. He said the U.S. has had to become more aggressive with its trading partners to push them to oppose EU's use of geographical indications.

"Be careful about trying to accept any kind of geographical indicators from the EU trying to brand or trademark or patent common food names that have been around the world for over 100 years," Perdue said. "That's the signal we're trying to send to our trade partners is that this is not acceptable and we don't intend to comply with that."

Another topic at the G20 -- and one that was also touched upon last week at the White House with EU officials -- is reforming the World Trade Organization. For Perdue, one of the major trade problems related to the WTO is that countries need to follow the scientific guidelines of the World Organization for Animal Health, known by its French acronym, OIE. Perdue said countries tend to ignore the science.

"What we are trying to determine is how we can make the WTO into an organization that guides international trade the way it was intended," Perdue said. "We find that some of the problems with the U.S.'s relationship with China is that they ignore things they want to ignore and create standards of their own that are outside of sound science."

Perdue spoke to reporters Monday from Puerto Rico where Perdue said he is meeting with the governor, agriculture secretary of Puerto Rico and USDA's main liaison who was installed after Hurricane Maria last September devastated the island.

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Chris Clayton