Ag Policy Blog

Summary Reaction to Trump Trade Aid: It's Not Enough

Jerry Hagstrom
By  Jerry Hagstrom , DTN Political Correspondent

Reacting to the Agriculture Department’s announcement Monday of the package of trade aid for farmers impacted by tariffs other countries have imposed on U.S. farm products in retaliation for the tariffs that the Trump administration has imposed on their products, most members of Congress and farm leaders said they appreciated what had been provided, but that it won’t make up for the damage to overseas markets.

Senate Agriculture Committee Chairman Pat Roberts, R-Kan., said, “I appreciate Secretary [Sonny] Perdue’s efforts to provide temporary relief to our hard-working farmers who are being affected by tariffs.”

“However, with low prices across the board, our farmers need long-term certainty. They want the predictability of export markets over aid. The announcement on a preliminary agreement with Mexico is a critical step in the right direction.

“We also need to quickly finish our work on a bipartisan farm bill that contains programs that provide much-needed certainty and predictability for farmers, ranchers, growers, and other stakeholders in rural America.”

Sen. Charles Grassley, R-Iowa, said, “It’s important that the White House has recognized the difficult position farmers are in due to ongoing trade negotiations. This temporary relief from new tariffs will be welcomed by farmers in Iowa and throughout the country, but what they really want are long term markets, not handouts.

“To help corn farmers, the administration should announce its approval of E15 for year round sales. This technical correction will help farmers and lower the cost of Renewable Fuels Standard (RFS) compliance for oil refineries by producing more Renewable Identification Numbers (RINs) which are used to ensure biofuels are being blended into our nation’s fuel supply.

“News today of a preliminary bilateral agreement with Mexico is encouraging, and shows that the president is working to follow through on his commitment to farmers.”

American Farm Bureau Federation President Zippy Duvall — “The administration’s tariff mitigation package is welcome relief from the battering our farmers and ranchers are taking in the ongoing trade war.”

“There is no doubt that the tariffs from nations like China have led to lower crop and livestock prices. This comes on top of nearly five years of falling commodity prices that have led to lower revenues and higher debt levels for farmers and ranchers.

“Nationwide, income is at a 12-year low, so any assistance that may help farmers is greatly appreciated: We lost more than 150,000 farms to consolidation and financial failure in the U.S. during the decade that ended in 2017.

“The additional burden of tariffs on the goods we sell to China, Canada, Mexico and the European Union has been more than many farmers can bear.

“Today’s aid announcement gives us some breathing room, but it will keep many of us going only a few months more. The real solution to this trade war is to take a tough stance at the negotiating table and quickly find a resolution with our trading partners.

“If we’re going to turn our farm economy around for the long-term, we need to open more export markets with fair trade deals, and the sooner, the better.”

National Farmers Union Senior Vice President of Public Policy and Communications Rob Larew — “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.”

“But our family farmers and ranchers need strong markets and long-term certainty. This trade war has already caused irreparable, long-term harm to what were strong trade relationships for American family farmers and ranchers.

“As a result, farm prices continue to plummet for U.S. farm goods, and our competitors are putting more land into production to fill the void.

“Farmers Union wants to see the administration pursue fair trade agreements to the benefit of farmers and rural communities. But it must transition away from an ad hoc emergency aid strategy and to work with Congress to develop a legislative solution to low farm prices that keeps family farmers in business.

“While the current farm economy and outlook are bleak, the administration and Congress have the tools to protect family farmers over the course of this trade war.”

The National Sustainable Agriculture Coalition — “The trade wars have the very real potential to cause lasting harm to American farmers and ranchers. But the $12 billion ad hoc aid package is also likely to cause lasting harm to U.S. farm policy.”

“Our farmers need a strengthened safety net and level playing field. Instead of throwing scarce funds into an ad-hoc aid package, these funds could be used by Congress to create lasting programs and thoughtful policies that will help all of American agriculture for years into the future.

“Instead, the ad hoc approach is creating a bucket load of fairness issues, including not just one commodity versus another, but also the layering on of multiple annual payment limitations, magnifying inequities within agriculture and opening the door to multi-million dollar payments.

“Now is the time for Congress to step up and create a sound, long term, and fair trade and farm safety net policy rather than ceding control to a shoot from the hip ad hoc administrative process.”

American Soybean Association President John Heisdorffer, a soybean producer from Keota, Iowa, represents farmers who will get more help from the package than any other sector. — “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.”

“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.

“This assistance will be particularly helpful to farmers who didn’t forward-contract their crop earlier this year and who need to arrange financing for planting next year’s crop.”

ASA noted, “The expected value of the 2018 soybean crop has been under increasing pressure ever since tariffs were imposed first by the U.S. and then by China on July 6.”

“In the last two months, USDA has raised its estimate for soybean production in 2018 to a record 4.6 billion bushels, reduced its estimate for soybean exports in the 2018-19 marketing year by 230 million bushels, and projected an 82 percent increase in soybean carryover stocks to 785 million from 430 million bushels by September 2019.”

Heisdorffer also emphasized that ASA strongly supports USDA’s initiative to provide an additional $200 million to develop foreign markets through a trade promotion program.

“Increasing funding for market development has been a top ASA priority for this year’s farm bill and is even more critical given the need to find new export markets for U.S. soy and livestock products,” Heisdorffer said.

“While this assistance package will definitely help our farmers get through the bad patch we’re currently facing,” Heisdorffer continued, “we must remain focused on market opportunities in the long term.”

“Indications that the NAFTA negotiations with Mexico are heading toward a successful outcome are also welcome news for U.S. soybean farmers.”

Heisdorffer added that, “We hope a new NAFTA will build on the original agreement for U.S. soy and livestock product exports and that Canada will soon join the pact.”

China was the No. 1 export market for U.S. soybean growers in 2017, importing 31 percent, or nearly one in every three rows of total production, equal to 60 percent of total U.S soybean exports, ASA pointed out.

The National Pork Producers Council noted that USDA’s package would include a nearly $559 million purchase of pork for federal nutrition assistance and child nutrition programs and $200 million for developing foreign markets for U.S. agricultural products.

It would also include some direct payments to farmers, including pork producers, NPPC said, who would receive $8 per hog based on 50 percent of the number of animals they owned on Aug. 1.

“True to his word that he would have our backs, President Trump today demonstrated his commitment to America’s farmers, including pork producers, by giving us some relief from the financial hit we’ve taken from retaliatory tariffs from some of our biggest trading partners,” said NPPC President Jim Heimerl, a hog farmer from Johnstown, Ohio.

NPPC said, “U.S. pork exports to China are down significantly for the year, with the value falling by 9 percent through June. The drop has come mostly because of the 50 percent additional tariff that country imposed in response to U.S. duties on Chinese steel and aluminum imports and on other goods over China’s theft of intellectual property, and its forced transfers of U.S. technology.

“Exports to Mexico are down slightly. In June, it put a 10 percent tariff on U.S. pork in response to U.S. tariffs on Mexican steel and aluminum imports; the duty increased to 20 percent on July 5.”

“While we’re grateful and commend the administration for its action to help us,” Heimerl said, “what pork producers really want is to export more pork, and that means ending these trade disputes soon.”

Kevin Skunes, president of the National Corn Growers Association (NCGA) — “Plans unveiled by the U.S. Department of Agriculture (USDA) to provide aid to farmers negatively impacted by trade tariffs and ongoing trade uncertainty would be insufficient to even begin to address the serious damage done to the corn market as a result of the administration's actions.”

The organization 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.

“NCGA members had a spirited debate on the prospect of trade aid during last month's Corn Congress meeting,” said NCGA President and North Dakota farmer Kevin Skunes.

“While most members prefer trade over aid, they support relief if it helps some farmers provide assurances to their local bankers and get through another planting season. Unfortunately, this plan provides virtually no relief to corn farmers.”

According to an NCGA-commissioned analysis, which NCGA provided to USDA and the Office of Management and Budget (OMB), trade disputes are estimated to have lowered corn prices by 44 cents per bushel for crop produced in 2018.

This amounts to $6.3 billion in lost value on the 81.8 million acres projected to be harvested in 2018. USDA’s plan sets the payment rate for corn at just one cent per bushel.

“NCGA has understood from the beginning that this aid package would neither make farmers whole nor offset long-term erosion of export markets. But, even with lowered expectations, it is disappointing that this plan does not consider the extent of the damage done to corn farmers,” Skunes said.

“Once again, we are calling on the administration to settle trade disputes and support a strong Renewable Fuel Standard. These no-cost, immediate actions would deliver a real win for rural America.”

National Association of Wheat Growers President Jimmie Musick, a Sentinel, Okla., wheat farmer — “In public remarks last week, USDA Secretary Perdue stated that the federal aid package for farmers being harmed by our current trade war with China won’t seem like it’s equitable. This was made clear today when the administration introduced a proposal which poorly reflects the reality that all farmers are being harmed by tariffs.”

“NAWG appreciates the administration’s steps to hold China accountable for unfair trade practices, but tariffs and the subsequent self-inflicted need to provide aid aren’t the answer. Farmers across the country want ‘trade, not aid,’ especially wheat growers.

“About half of all U.S. wheat is exported, making new trade deals and establishing new global markets, a priority for all wheat farmers. 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-cent/bushel price decrease and a reduction in global wheat production.”

Chris Kolstad, a wheat farm from Ledger, Mont., and chairman of U.S. Wheat Associates, which promotes U.S. wheat sales in foreign countries — “We appreciate that the Trump administration supports the need for additional market development in this unique trade environment.”

“We are glad to see progress toward a renegotiated NAFTA that builds on the opportunities the existing agreement opened with Mexico’s wheat importing flour millers. We hope it spurs negotiations with Canada to resolve outstanding issues like its discriminatory wheat grading law.”

“The new market development program will help us plan new activities that will begin repairing the cracks in our crucial, long-term trade relationships with Mexico and other countries

“Like NAWG, we believe the long-term solution is to end the trade war and move on to negotiating new trade deals that work for farmers and for our overseas customers,” Kolstad said.

The National Cotton Council (NCC) applauded the plan to assist farmers.

“The Market Facilitation Program will provide $0.06/lb on at least half of a producer’s 2018 cotton production (upland and ELS),” NCC said.

“The payment rate on the second half of 2018 production will be determined later and may remain at the same payment level. Once harvest is complete, production evidence must be provided to the local USDA Farm Service Agency office before payments will be made.

“The Market Facilitation payments are subject to the existing $900,000 adjusted gross income means test and a separate $125,000 per person payment limit for the eligible crops.

NCC Chairman Ron Craft, a Plains, Texas, ginner, said “The National Cotton Council strongly commends Secretary Perdue and his team at USDA for their ongoing efforts to help U.S. agriculture manage through the current trade disruptions as the administration seeks to address unfair trade practices and barriers.”

“The tariff mitigation program announced today will help address a portion of the losses cotton producers are facing in the marketplace. However, there is continued economic stress on producers in areas of the Cotton Belt that have lost production this year due to severe drought.

“In addition, cotton and cottonseed industry participants throughout the marketing channels are also feeling the impacts of the retaliatory tariffs.”

The National Sorghum Producers — “Through the Market Facilitation Program (MFP) in the Trump tariff aid plan, sorghum producers will receive 86 cents per bushel. This initial payment will only be made on 50 percent of 2018 actual production, and a second payment on the remaining 50 percent will be subject to reevaluation if warranted, USDA said in its announcement.”

“The initial payments for sorghum are expected to total approximately $156 million.

“National Sorghum Producers would like to thank USDA Secretary Sonny Perdue and U.S. officials who have worked together to stand by U.S. farmers and provide much needed relief. This sends a strong message to the international trade community and will hopefully facilitate a speedy resolve to our current trade disputes.”

National Milk Producers Federation President and CEO Jim Mulhern said the plan “falls far short of addressing the losses dairy producers are experiencing due to trade retaliation resulting from the Trump administration’s imposition of steel and aluminum tariffs.”

“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.

“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. Since the retaliatory tariffs were announced in late May, milk futures prices have lost over $1.2 billion through December 2018. Milk prices for the balance of the year are now expected to be $1.10-per-hundredweight lower than were estimated just prior to the imposition of the tariffs on U.S. dairy exports.

“Dairy farmers are particularly vulnerable to downward price swings because, unlike crop farmers who harvest once a season, dairy producers harvest and market their product daily. If farmer incomes continue to suffer as projected, we will lose more farms.

“We appreciate that USDA has been seeking ways to help producers weather these volatile economic times. The product purchase program and the Trade Promotion Program are important elements of the overall package, and we will continue working with the department to best accomplish our shared goals of supporting dairy farmers’ prices in light of the harm caused by retaliatory tariffs.

“Although there may be a second direct aid package at the end of the year, dairy producers are greatly disappointed that the farmer aid portion of today’s trade relief package does not adequately address the harm done to dairy.

“Given today’s other news that the Trump administration has reached a trade deal with Mexico, we are repeating our request that the administration provide relief to farmers by restoring normal trading conditions so that our product exports to Mexico — as well as to China — are not penalized by retaliatory tariffs.

“In addition, we believe it’s essential that the administration also pursue the opening of new market access opportunities through trade agreements that expand U.S. dairy exports. Those steps on trade would pay meaningful dividends to our farmers.”

“By failing to put more reasonable limits on farm bailout payments, Trump’s USDA will provide the lion’s share of the payment to the largest and most successful farmers.

“Congress should immediately act to place tighter limits on the payments provided through Trump’s scheme, and should deny bailout payments to millionaires and city slickers who do not live or work on the farm. Under today’s proposal, thousands of city slickers will receive payments.”

Federal Register notice on Market Facilitation Program: https://s3.amazonaws.com/…

Jerry Hagstrom can be reached at jhagstrom@njdc.com

Follow him on Twitter @hagstromreport

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