USDA adds 14.5B to salve sting of retaliatory Tarriffs on Farmers

USDA steps up and announces we got your back to farmers. They laid out details of the new $16-billion trade aid package for farmers stung by retaliatory tariffs, with sign-ups set to begin next week.

USDA has set aside $14.5 billion for direct payments to farmers, which will be doled out in three installments. For the first round, farmers will receive at least $15 an acre, or 50 percent of their total estimated payout — whichever is greater. The maximum payment rate will be $150 an acre.

Agriculture Secretary Sonny Perdue lays out a trump card for this latest trade relief program to keep the promise to shield farmers from bearing the brunt of the trade war while giving the administration time to strike fair and reciprocal trade deals.

“China and other nations have not played by the rules for a long time, and President Trump is the first President to stand up to them and send a clear message that the United States will no longer tolerate unfair trade practices,” Perdue said in a statement.

On top of direct payments, USDA will spend $1.4 billion to buy commodities and redistribute them to food banks, school cafeterias and other nutrition programs. Another $100 million is being devoted to assist food and farm groups in developing new export markets. USDA last week announced 48 organizations that were awarded trade-promotion funding, including the American Soybean Association and U.S. Grains Council.

Trade aid 2.0 was first announced in May, after trade negotiations between the U.S. and China fell apart. Those talks have been rebooted since Trump and Chinese President Xi Jinping reached a tentative truce at the G-20 meeting in Japan in late June. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are traveling to Shanghai for the next round of high-level trade talks, beginning Monday.

USDA rolled out a similar three-piece relief package in 2018 to aid producers after Trump launched the trade war against China and imposed tariffs on imports from Canada, Mexico and the European Union, which led to countermeasures from those nations targeting American farm exports. An agreement with Canada and Mexico in May lifted those nations' retaliatory tariffs, taking some of the pressure off U.S. farm country.

USDA Chief Economist Robert Johansson said the department's latest estimates of trade-related damage to U.S. agricultural exports took into account the removal of Canada's and Mexico's tariffs.

In crafting the second trade aid program, USDA incorporated feedback from last year. Officials said they tried to design the second round to minimize the potential to influence farmers' planting decisions, particularly at a time when flooding in the Midwest has delayed or prevented many producers from getting a crop in the ground. They also said the program's design takes a longer-term view of U.S. agricultural trade.

To determine trade damages, USDA looked at peak export levels over the last decade for specific goods to countries that are currently imposing retaliating duties against those goods; those levels were then compared with shipments from this year.

The department’s 2018 trade-mitigation package was based on export comparisons only with the previous year. Johansson said the change in methodology reflects non-tariff barriers that U.S. farmers have long been facing overseas.

USDA officials also designed direct payments differently. Payments from the 2018 package were based on specific commodities; this time, every commodity farmer in a county will receive the same payment per acre, regardless of what they planted.

Under the previous system, the majority of the direct payments — more than $7 billion — went to soybean growers. Corn growers, by contrast, were paid a penny per bushel under the 2018 plan, or $192 million.

“The last thing we wanted to do was develop a program that made producers feel like they should plant soybeans to get a larger payment,” Johansson said.

For pork and dairy producers, payments will be based on the number of hogs they owned during a certain 45-day period this year, or on their milk production history, respectively. Farmers growing nuts, fresh sweet cherries, fresh grapes, cranberries and ginseng will be paid based on the number of acres they planted this year.

If a farmer grows row crops like soybeans, cotton, and wheat, along with eligible livestock and specialty crops, they can collect payments from all three categories. Combined, each farm operation is capped at $500,000 in trade relief payments, said Bill Northey, undersecretary for farm production and conservation. That is higher than the limit applied to the 2018 program, which was $375,000.

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