USDA Sets Plans for $16 Billion in New Aid to Farmers

Date: Friday, July 26, 2019
Source: The Wall Street Journal

Fresh support for agricultural sector follows stalled U.S.-China trade talks

The U.S. Department of Agriculture is preparing to deploy $16 billion in government funds to aid farmers hurt by the trade battle with China and wet weather that kept many from planting a crop this spring.

China’s tariffs on $60 billion in U.S. imports, implemented in response to U.S. tariffs on Chinese goods, have bruised a U.S. farm economy already struggling after years of low crop prices. Slackened demand from China—one of the top buyers of U.S. agricultural exports—has cut into farmers’ take-home pay and disrupted business for top agricultural exporters like Cargill Inc., Archer Daniels Midland Co. and Bunge Ltd. The Trump administration said it would extend this next batch of aid to farmers after U.S.-China trade talks collapsed in early May.

“President Trump has a great affection for America’s farmers and ranchers,” USDA Secretary Sonny Perdue told reporters Thursday.

The USDA will divide the $16 billion among soybean fields, hog barns, dairy farms, cranberry bogs and other agricultural operations and groups. Payment rates will range between $15 and $150 an acre, the USDA said, based on a farm’s location and this year’s expected production.

Agricultural trade organizations welcomed the move, though some farmers and economists questioned disparities in payment rates across different parts of the country, and whether the program could favor some farmers over others.

“This assistance is desperately needed, but the ad hoc rollout and convoluted structure of these programs has caused significant confusion among producers,” said National Farmers Union President Roger Johnson.

U.S. farmers raise more food than the country can consume, leaving the U.S. agricultural industry more reliant on exports as productivity grows. The past year’s trade disputes have turned it into a liability.

Tariffs slashed Chinese purchases of U.S. soybeans by 75% over the 12 months ended May 31, according to USDA data, reducing per-bushel prices paid to farmers and prompting many to shift fields to corn this spring. Tariffs on U.S. pork have left U.S. hog producers and meatpackers to watch while China ramps up meat purchases from countries like Spain, Brazil and Australia to replenish supplies after a pig disease decimated Chinese hog farms.

“It’s a huge wet blanket over the whole ag space,” said Louise Gartner, owner of Spectrum Commodities, an Ohio-based firm that advises farmers and ranchers on trading strategies.

The program will direct $14.5 billion to farmers deemed to have suffered from trade disputes. Beyond crop producers, hog farmers can get $11 per head, dairy farmers can receive 2 cents per pound of milk produced, and nut growers can receive $146 an acre.

Mr. Perdue said the USDA designed the program based on feedback following last year’s $12 billion trade aid program, rolled out after China, Mexico and Canada levied tariffs on U.S. exports. “There will be some disparities,” he said.

In northeastern Oklahoma, where Scotty Herriman grows corn, soybeans and wheat, springtime flooding wiped out most of his corn crop and forced him to instead plant soybeans, a major target of China’s tariffs. Mr. Herriman said the aid program would help ease his financial strain, for now.

“We’re going to be OK to ride this thing into another year but we can’t stand it very much longer,” said Mr. Herriman, whose county was awarded a $40 per-acre payment rate.

Despite their trade-driven struggles, Mr. Trump retains strong support among farmers, a major constituency in the Midwestern states that in 2016 helped propel him to the White House. A July 1 Farm Journal survey sent to 5,000 U.S. farmers and ranchers found that 79% approved of Mr. Trump’s performance as president, up from 74% in June.

Farmers will be eligible to sign up for the new payments starting Monday, the USDA said. The first checks will flow to farmers in August.

No applicant can get more than $500,000 under the program, and farmers can’t get a payment if they have made more than $900,000 a year between 2014 and 2016, the USDA said.

Farmers who struggled with floods and repeated rainfall can seek a $15 per acre payment under the program, provided they filed an insurance claim for affected fields and planted a replacement crop to help maintain fields. Acres that went unplanted entirely aren’t eligible for payments, the USDA said.

 

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