U.S. announces $12 billion in farm aid as trade war deepens

The U.S. government, it appears, has no plans of backing down from its trade war with China, Mexico, Europe and Canada.

This afternoon the U.S. Department of Agriculture announced US$12 billion in federal aid programs for farmers to help them cope with declining prices and falling demand for American soybeans, pork, fruits, nuts and other crops.

The USDA will provide $12 billion worth of support to American farmers because it pegged the cost of tariffs on U.S. agricultural goods, imposed by other nations, at $11 billion.

“This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy,” U.S. Agriculture Secretary Sonny Perdue said. “Unfortunately, America’s hard-working agricultural producers have been treated unfairly by China’s illegal trading practices and have taken a disproportionate hit when it comes to illegal retaliatory tariffs. USDA will not stand by while our hard-working agricultural producers bear the brunt of unfriendly tariffs enacted by foreign nations.”

For months, U.S. farm groups have complained about Trump’s trade policies and the financial impact on family farms. From April until early July, China, Europe, Mexico and Canada all announced tariffs on U.S. foods and agricultural commodities in retaliation for U.S. tariffs on steel, aluminum and in China’s case, import duties on $50 billion worth of Chinese goods.

China, for instance, now has a 62 percent duty on U.S. pork, effectively shutting American pork out of the massive Chinese market.

To compensate for lost sales and weaker markets, the USDA will “provide payments incrementally to producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs.”

As well, the USDA will implement a food purchase program, where the Agricultural Marketing Service will buy surplus commodities like legumes, rice, beef, pork and milk and, then distribute those foods to food banks and nutrition programs throughout the U.S.

U.S. soybean producers offered a mixed response to the financial relief. Chinese tariffs of 25 percent on U.S. soybeans, announced this spring and enacted July 6, are troublesome because China bought 31 percent of American soybean production in 2017. U.S. soybean futures have dropped about $2 per bushel since May.

“While soybean growers appreciate the administration’s recognition that tariffs have caused reduced exports and lower prices, the announced plan provides only short-term assistance,” the American Soybean Association said in a statement.

The ASA went on to say that soybean growers are facing an “urgent situation” this fall because exports could drop by 11 percent.

“The American Soybean Association has consistently advised the administration that the best way to reduce our nation’s trade deficit is by increasing exports, including of agricultural products,” said John Heisdorffer, ASA President.

“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.”

The response of the National Pork Producers Council was more positive. It praised Trump for the federal aid.

“President Trump has said he has the back of U.S. farmers,” said NPPC president Jim Heimerl, a pork producer in Ohio. “Today (Trump) demonstrated this commitment with an aid package to sustain American agriculture cut off from critical export markets as his administration works to realign U.S. global trade policy.”

robert.arnason@producer.com

 

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