Government

Soybean farmers get biggest chunk of U.S. aid

They get most of the $4.7B subsidy to cope with trade wars

John Heisdorffer, president of the American Soybean Association (ASA), smiles as his dog, Buddy, runs around at his farm in Keota on Thursday, April 5, 2018. (Stephen Mally/The Gazette)
John Heisdorffer, president of the American Soybean Association (ASA), smiles as his dog, Buddy, runs around at his farm in Keota on Thursday, April 5, 2018. (Stephen Mally/The Gazette)
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Farmers suffering economic consequences from the trade wars President Donald Trump heated up by imposing tariffs will get up to $4.7 billion in government payments starting in September — with the possibility of more subsidies if agriculture export prices keep floundering.

Most of the direct payments — $3.6 billion — will go to soybean farmers who are facing prices that have dipped to nearly decade lows. Pork producers will receive the second-highest payment of $290 million. Dairy, corn, sorghum, wheat and cotton producers also will receive aid under the plan announced Monday by the U.S. Department of Agriculture.

Farmers can begin applying for the price support Sept. 4 and the first payments are expected in mid-September.

Monday’s announcements of the price supports came as Trump also announced the United States and Mexico had reached an agreement in principle about a year after talks began to alter the 24-year-old North American Free Trade Agreement. Mexico and Canada are major markets for farm exports — although Canada has yet to agree to the pact.

Both announcements also come as Republicans hope to keep control of both chambers of Congress in the midterm elections this November. Farmers are a key part of the rural base that elected Trump, who vowed they will emerge better off from a trade war. Many farmers are accepting that promise.

Still, an extended trade dispute that lingers into the fall harvest and the election holds the potential to shake that support. Trump has been under pressure from lawmakers representing rural districts to back away from imposing tariffs.

The price-support funds don’t need congressional approval as they are administered under USDA disaster procedures that date to the Great Depression.

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On a conference call Monday, U.S. Secretary of Agriculture Sonny Perdue said it was clear farmers would be vulnerable in any trade dispute, and that they are patriots who support Trump.

“But it’s a fact that they cannot pay their bills with simple patriotism,” he said.

Under the USDA formula, soybean farmers would be paid $1.65 per bushel at 50 percent of anticipated production levels.

The subsidy also will pay 1 cent per bushel of corn and 14 cents per bushel of wheat. Payments to hog farmers will be $8 per pig multiplied by 50 percent of Aug. 1 production, and dairy farmers will get 12 cents per hundred weight of production.

“An announcement about further payments will be made in the coming months, if warranted,” Perdue said.

The USDA said last month it planned to give up to $12 billion in aid to help compensate for agriculture losses.

In addition to the direct payments, USDA officials said they expect to spend up to $1.2 billion on a commodity purchase program and $200 million to develop foreign markets.

The American Soybean Association said it welcomed the aid plan.

“This will provide a real shot in the arm for our growers, who have seen soybean prices fall by about $2.00 per bushel, or 20 percent, since events leading to the current tariff war with China began impacting markets in June.” said John Heisdorffer, a Keota farmer who is president of the association.

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Soybean producers not only are facing price pressure because of the trade dispute, but production estimates for the 2018 crop are up.

The Iowa Corn Growers Association also said it welcomed the aid, but said it would not make farmers whole.

“Corn farmers prefer to have market access to compete in a global marketplace, not rely on government assistance, for their livelihoods,” said Mark Recker, an Iowa farmer who is the president of the association.

Some commodity groups said the plan wasn’t fair. The National Association of Wheat Growers, for one, said it didn’t reflect the harm being done to farmers.

“Farm income is down, and rural America is enduring a prolonged economic downturn,” the association said in a statement. “This relief package shows that the administration isn’t grasping the tough conditions being faced by farmers. The long-term solution is to end the trade war.”

The Bloomberg news service contributed to this report.

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