To blunt the harm to U.S. agriculture from international retaliatory tariffs, the USDA announced up to $12 billion in aid to farmers and ranchers.
In the early afternoon of July 24, the USDA announced a trio of direct and indirect financial aid programs. Though logistical details were scarce, the programs are aimed at offsetting the effects of what was repeatedly called “illegal retaliatory tariffs.”
“President Trump has promised since Day One that he has the back of every American farmer and rancher, and today, this announcement is a fulfillment of that promise,” proclaimed Secretary of Agriculture Sonny Perdue as he introduced the programs.
“Unfortunately, America’s hardworking agricultural producers have been treated unfairly by illegal trading practices by China and other nations for a while and have taken a disproportionate hit when it comes to illegal retaliatory tariffs,” Perdue continued.
The referenced retaliatory tariffs refer to those levied by numerous countries following the U.S.’ Section 232 steel and aluminum tariffs from March, as well as the additional Section 301 tariffs the U.S. has levied against China in particular.
“The programs we are announcing today are a firm statement that other nations cannot bully our agricultural producers to force the United States to cave in.”
As announced, the three programs are:
• Market Facilitation Program—This program will provide direct payments incrementally to producers, especially for soybeans, corn, wheat, sorghum, dairy, and hog producers “to help manage disrupted markets, deal will commodity surplus, and expand new markets.”
• Food Purchase and Distribution Program—This program will purchase the surplus of affected commodities like fruits, nuts, rice, legumes, dairy, pork and beef. This surplus will be purchased and distributed to food banks and other nutrition programs.
• Trade Promotion Program—Assist in developing new export markets. This will be done in conjunction with private and industry efforts already in place.
“This announcement is substantial, but we cannot overstate the dire consequences that farmers and ranchers are facing in relation to lost export markets.” — Zippy Duvall
Perdue and later Chief USDA Economist, Dr. Rob Johannson, explained that the programs are one-time only and short-term. The stated goals of the programs are to alleviate some of the financial harm U.S. ag producers are suffering because of the retaliatory tariffs, as well as give the administration more time to negotiate trade deals with the involved countries.
Thin on details
The announcement came via a last-minute conference call with ag and business news media. Five top leaders of USDA, including Perdue, fielded questions about the programs’ specifics. However, despite several pointed questions, the responses of the USDA officials did not provide much depth of detail.
Responding to a question from DTN’s Chris Clayton, Johannson explained that the USDA is still working out the specific details of how tariff-related damages will be calculated. He added that this information will be published in a rule-making action “in a couple weeks.”
Brad Karmen, USDA assistant deputy administrator for farm programs, added that the department has “a little homework to do” on the practicalities of the programs. He said that they don’t have a date on when sign-ups for the programs will begin.
Later on, in response to another question regarding when the programs will take effect, Agriculture Undersecretary for Marketing and Regulatory Programs, Greg Ibach, said they are aiming for a Labor Day rollout.
Ibach added that, since the USDA has been working on the programs since April, “we decided to go ahead and make the announcement so farmers and ranchers would understand that USDA, Secretary Perdue and the president had made good on their promise to not to have farmers and ranchers at the tip of the spear.”
“NCBA looks forward to reviewing the details of the Trump administration’s trade retaliation relief package.” — Kent Bacus
When asked how the estimated $12 billion in aid will be distributed across the three programs, or across industries affected by tariffs, the responding officials only partially answered. Ibach indicated that “the main investment” will be in the direct payments program. Later, Johannson implied that soybean producers will likely be the biggest beneficiaries of the direct payments, saying:
“I think it’s fair to say that soybeans are likely the largest sector affected and, as we pointed out, the Market Facilitation Program is likely to have the majority of the resources to help offset the damages as a result.”
When asked if all three programs will cover all commodities, answers were less than specific. For example, Johannson responded, saying the Market Facilitation Program would “target farmers that grow soybeans, sorghum, corn, wheat, cotton, dairymen as well as hog producers” and that the Food Purchase and Distribution Program will be “looking to purchase… mainly fruits, nuts, rice, legumes, in addition to some meat categories like beef and pork, as well as some dairy components” (emphasis added).
Though such language does not expressly exclude other producers from those programs, it suggests they might be. From this, it seems the beef industry may only be included in the Food Purchase and Distribution Program.
Though WLJ participated in the press call, it was passed over to pose questions to the USDA officials.
Mixed response from industry
Following the announcements, there was a flood of responses from industry. The tone was mostly appreciative, but with almost every beef and agricultural group voicing hope that a long-term fix to trade uncertainties will be reached quickly.
“This announcement is substantial, but we cannot overstate the dire consequences that farmers and ranchers are facing in relation to lost export markets,” commented American Farm Bureau Federation President Zippy Duvall.
“Our emphasis continues to be on trade and restoring markets, and we will continue to push for a swift and sure end to the trade war and the tariffs impacting American agriculture.”
“NCBA looks forward to reviewing the details of the Trump administration’s trade retaliation relief package,” said Kent Bacus, director of international trade for the National Cattlemen’s Beef Association (NCBA).
“Trade agreements and trade enforcement are the most effective long-term solutions to the challenges faced by U.S. beef producers.”
The National Farmers Union (NFU) took a much more aggressive position, saying it is “weary of the administration’s go-it-alone, bull-in-a-china-shop approach” to trade.
“While we appreciate the move to provide stopgap assistance, this plan is a short-term fix to a long-term problem,” said NFU President Roger Johnson.
“President Trump’s escalating trade war with China and much of the rest of the world requires that we go to significant lengths to protect the men and women who grow our food, fuel and fiber. Their livelihoods are on the line with every tweet, threat or tariff action that comes from the White House.” — Kerry Halladay, WLJ editor
