Corn, wheat growers try to influence next trade aid
The Trump administration’s plans to develop a second trade aid package for farmers hurt by reduced exports to China resulted in rounds of lobbying and scrutiny of the idea May 14.
Corn and wheat lobbyists are trying to get a better deal for their growers in this package than they got in the first package.
Soybean growers fared the best in the first round of trade aid because they had been the biggest exporters to China and lost the most when China stopped importing U.S. farm products after the Trump administration imposed tariffs on Chinese goods and China retaliated by putting tariffs on U.S. commodities. Agriculture Department officials said the formula they developed that provided most of the aid to soybean producers was necessary because they had to follow World Trade Organization rules.
While soybean producers got a Market Facilitation Program payment of $1.65 per bushel, corn growers got 1 cent.
“A penny didn’t cut it before and won’t cut it now,” said a spokeswoman for the National Corn Growers Association. “NCGA is working to determine if there are some alternative options that can be shared with the administration.”
Wheat growers got 14 cents per bushel. A National Association of Wheat Growers spokeswoman said that NAWG had requested a meeting with USDA Chief Economist Rob Johansson and Agriculture Undersecretary for Trade and Foreign Agricultural Affairs Ted McKinney.
Joseph Glauber, a former USDA chief economist now with the International Food Policy Research Institute, told The Hagstrom Report that “the best way to get money out to farmers is through the same sort of program (USDA) ran last year. The problem is that the formula they used compensated only those commodities for which there had been significant trade in 2017. So soybeans gets compensated, corn for all intents and purposes does not. Would they rethink the formula this time around?
“I think it is hard to acquire commodities to store — they would have to use the CCC (Commodity Credit Corporation) Charter Act, and it would be costly,” he said.
Glauber noted that, while Trump tweeted about distributing U.S. commodities as international humanitarian aid, “we don’t typically package soybeans in food aid (occasionally they do fortify grains with meal), but food aid is typically in the form of food grains (wheat, rice, flour).”
Glauber said various forms of aid could result in problems for the United States at the WTO.
“If they try dumping a lot of corn, wheat, and soybeans via concessional sales or humanitarian aid, you risk a WTO challenge as an export subsidy,” Glauber said, noting the agricultural ministers from WTO member countries had agreed at a 2015 meeting in Nairobi that export subsidies are prohibited.
“A second round of MFP payments will also raise a lot of eyebrows in Geneva and could prompt a WTO challenge similar to the cotton dispute,” he said, a reference to the case that Brazil won against the U.S. cotton program years ago.
Glauber said one year of MFP payments is not likely to be challenged, but “if you start running ad hoc programs every year (like the disaster bills in the late 1990s), it eventually could cause someone to file a dispute (like Brazil did for cotton).”
A market analyst said that the prospect of another round of trade aid might prompt more farmers to plant soybeans, even though they are in surplus, in hopes that trade aid payments would be higher than for other commodities.
The Washington Post ran two articles on farm trade aid on Tuesday. One focused on the politics of developing the trade aid package while the other was analysis that noted the taxpayers may be paying for subsidies to farmers who likely voted for Trump and might again in 2020. ❖