Government

Trump plans $16B more in farm trade aid

Subsidy is in addition to $12B announced last year

Farmer Dave Walton holds soybeans in Wilton, Iowa, U.S. May 22, 2019. Picture taken May 22, 2019. REUTERS/Kia Johnson
Farmer Dave Walton holds soybeans in Wilton, Iowa, U.S. May 22, 2019. Picture taken May 22, 2019. REUTERS/Kia Johnson
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WASHINGTON — President Donald Trump, flanked by more than a dozen U.S. farmers at the White House, on Thursday announced a new $16 billion farm aid package to offset losses from the U.S. trade war with China.

Trump told the farmers in attendance, including an Idaho potato farmer wearing a red “Make Potatoes Great Again” cap, that he was “honored to have done this for you.”

“This support for farmers will be paid for by the billions of dollars the Treasury takes in” from China, Trump said. He said it will keep America’s “cherished” farms thriving.

Despite Trump’s assertion, China does not pay tariffs imposed by the United States on Chinese imports. Importers pay those tariffs, and some of them pass the cost on to U.S. consumers.

In a conference call with reporters ahead of the event, Agriculture Secretary Sonny Perdue said $14.5 billion of the $16 billion would be paid out directly to producers, who have been hit hard by Trump’s tariff showdowns with China, Mexico and other countries.

“This package insures farmers will not bear the brunt” of the trade wars, Perdue said.

Perdue acknowledged that U.S. farmers have been hit hard by the escalating trade fight with Beijing — but he said that Trump was working hard to shield them from the worst impacts. He said he remained optimistic about reaching a comprehensive trade agreement with China.

“All of us are hopeful of a renewed or signing of fair trade deal,” Perdue said. “I can’t recall a president more concerned about farmer well-being. We are working hard to assess trade damages and this package ensures farmers will not bear the brunt.”

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After Trump slapped tariffs of 25 percent on $250 billion of Chinese imports, Beijing retaliated with import taxes on U.S. agricultural commodities such as soybeans.

But even before the trade war began, farmers around the country had been struggling with falling farm income and commodity prices, rising debt and the vagaries of weather, including historic floods through the Midwest and now rain that has delayed spring planting around the country.

A new data analysis by the American Farm Bureau Federation showed that Chapter 12 bankruptcies - which allows family farmers and fishermen to restructure their finances to avoid foreclosure - rose from March, 2017 to March 2018, particularly in areas like the Upper Midwest where farmers have been particularly hard-hit.

Nancy Johnson, the executive director of the North Dakota Soybean Growers Association, said that the aid would be welcome by her increasingly stressed out and frustrated members, that have seen the price of soybeans per bushel drop to around $7.25 - under the level where farmers can even break even - down from $14 per bushel in 2012.

“We didn’t expect this to take a year, that’s where the frustration comes in,” said Wayne Fredericks, 68, who farms corn and soybeans in Osage, Iowa. “I’m not going to turn it down, I can’t afford to. Right now we’re looking at just breaking even.”

Randy Spronk, a hog farmer and past president of the National Pork Producers Council, who attended the president’s meeting with farmers, said that farmers realized the potential payouts will not make up for the losses due to a protracted trade war with China.

“Will it cover the losses? No. But it makes enough of a difference to keep a lot of farmers so they can survive,” he said. And, he said, farmers remained hopeful that the U.S., and China would soon come to a deal -- much as the U.S. came to an agreement with Canada and Mexico to lift tariffs on steel and aluminum. “As we saw from the metal tariffs, it can end very quickly-that’s good news for us,” Spronk said.

The aid package is the second bailout for farmers after the Trump administration announced $12 billion in emergency measures last July.

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The latest relief package will be paid to farmers in three installments, with the first payment in July or August. Further payments would take place in November and January 2020 — assuming the tariffs are still in place at that time, undersecretary for farm production and conservation Bill Northey told reporters on the call.

The relief plan aims to avoid problems that arose in the first aid package when soybeans received what many believed was a disproportionate amount of the money, while corn received only a penny a bushel. Other producers were shut out entirely from relief payments.

The bulk of the payments will be set aside for row crops such as alfalfa, wheat and oats, which will be paid at a single rate according to the number of acres planted in each county.

More niche crops, including tree nuts, sweet cherries, cranberries and grapes, will also be eligible for relief, depending on tariff impacts.

Dairy and pork producers also stand to receive relief under the system.

Distributing relief funds by-county, and not by commodity, will hopefully discourage farmers from planting crops that would be more lucrative in aid money.

An additional $1.4 billion will be used to purchase surplus food for food banks, schools and Native American tribes.

Trump said he allocated funds to the farmers because “trade has been very unfair to them.”

He also said the farmers, who have been supportive of him politically, tell him he’s “doing the right thing” because they know China has been “unfair to this country.”

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As Trump left the event, he turned to the Idaho potato farmer and said, “I’d rather be farming potatoes.”

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