Not all help is wanted and sometimes causes more consternation than comfort.
As reported in last week’s paper, the $12 billion trade mitigation programs went into effect on Sept. 4. On launch, the USDA released additional information on the programs, especially how much of what commodities the USDA’s Food Purchase and Distribution Program will buy.
However, some commodities groups are concerned and have questioned USDA’s metrics on trade damages. The trio of trade mitigation programs were announced as an attempt to address price declines in commodities targeted by international retaliatory tariffs leveled in response to the U.S. tariffs on steel and aluminum. A few grain groups want to know more about USDA’s math on how direct payment rates were calculated.
More details
On Sept. 4, when the three trade mitigation programs opened for applications, the USDA released additional details on the Food Purchase and Distribution Program. Targeted commodities will be purchased through the Agricultural Marketing Service beginning in October, but notices outlining commodity specifications began last week.
Though the USDA had previously given some information on purchasing levels, the Sept. 4 announcement included complete purchase details. They are as follows, in order of expenditure:
• Pork, $558.8 million
• Apples, $93.4 million
• Pistachios, $85.2 million
• Dairy, $84.9 million
• Oranges (fresh), $55.6 million
• Grapes, $48.2 million
• Rice, $48.1 million
• Potatoes, $44.5 million
• Walnuts, $34.6 million
• Cranberries, $32.8 million
• Orange Juice, $24 million
• Plums/Prunes, $18.7 million
• Navy Beans, $18 million
• Pecans, $16 million
• Beef, $14.8 million
• Kidney Beans, $14.2 million
• Peanut Butter, $12.3 million
• Peas, $11.8 million
• Macadamia, $7.7 million
• Lemons/Limes, $3.4 million
• Sweet Corn, $2.4 million
• Hazelnuts, $2.1 million
• Lentils, $1.8 million
• Blueberries, $1.7 million
• Strawberries, $1.5 million
• Pears, $1.4 million
• Grapefruit, $700,000
• Apricots, $200,000
• Figs, $15,000
Grain rate gripes
The lion’s share of the trade mitigation programs that began last week was the Market Facilitation Program, consuming about $4.7 billion of the total $6.1 billion in planned expenditures. (The trio of programs will be funded up to $12 billion, but thus far only about half of that has been planned.)
That $4.7 billion will go to seven different commodities in the form of direct payments to producers, but some commodities are getting considerably more than others in terms of payment rates. The widest example would be between corn and soybeans, with corn producers getting a penny per bushel on half of their 2018 production, whereas soybean producers will get $1.65.
Kevin Skunes, president of the National Corn Growers Association (NCGA), called the penny-per-bushel payment rate “an insufficient figure that would not even begin to address the serious damage done to the corn market as a result of the administration’s actions” in a recent op-ed published in The Hill. Elsewhere in the op-ed, he called the rate “pitiful” and “insulting.”
“It’s also not lost on me, or other farmers I’ve talked to over the summer, that this is an aid package created for a situation that could have been avoided in the first place,” he added.
Both Skunes in his op-ed and the NCGA in its response to the payment rates highlighted a recent NCGA-commissioned analysis that estimated the cost of the current trade disputes at 44 cents per bushel for crop produced in 2018.
“To be clear, corn farmers were under no illusions that this package would make farmers whole or offset long-term erosion of export markets,” Skunes continued in his op-ed. “As history has shown, once you lose a market, it is very difficult to get it back. Our global competitors are aggressively pursuing every opportunity we miss and our margin for error is shrinking.”
Ultimately, he said the best course of action for corn farmers would be for the administration to “remove barriers to agriculture’s success,” including “rescinding tariffs, securing NAFTA’s future, and pursuing new trade agreements.”
Jimmie Musick, president of the National Association of Wheat Growers (NAWG), had much the same message: “trade, not aid.”
“NAWG appreciates the administration’s steps to hold China accountable for unfair trade practices, but tariffs and the subsequent self-inflicted need to provide aid aren’t the answer,” he said in the group’s response to the aid programs.
“About half of all U.S. wheat is exported, making new trade deals and establishing new global markets a priority for all wheat farmers. As a result of the tariffs, China hasn’t purchased any wheat from the United States since March. Further, we estimate that the ongoing trade war will cause a 75-cents/bushel price decrease and a reduction in global wheat production.”
Under the Market Facilitation Program, wheat producers will get 14 cents per bushel on half of their 2018 production. During the press call on Aug. 27, USDA’s Chief Economist, Dr. Rob Johannson, repeatedly reminded call participants that it is possible that there will be an additional round of payments later on. December was suggested as a possible reassessment time for a possible second round of direct payments.
Rate questions
Grain commodities groups are not the only ones asking questions about payment rates. The Environmental Working Group (EWG) announced it had issued a Freedom of Information Act request to the USDA. The EWG is an environmental nonprofit advocacy group that focuses on agricultural practices and chemical contents of commonly used items potentially best known for its “dirty dozen” list of produce.
EWG’s announcement said it “is seeking details on how the USDA determined farmers’ eligibility for direct payments through its Market Facilitation Program,” and is specifically seeking “all records concerning its decision to pay up to $12 billion to farmers harmed by retaliatory tariffs levied on U.S. agribusiness by China and other nations in response to the Trump administration’s trade war.”
“The American people deserve to know exactly how the Trump administration devised this scheme,” said Scott Faber, the EWG’s senior vice president for government affairs, in the group’s announcement. He opined that the majority of the payments will go to “the wealthiest agribusiness operations and city slicker farmers” rather than struggling family farmers.
“On behalf of taxpayers, EWG is determined to find out.” — WLJ
