Retailiatory tariff relief program will benefit soybean growers, corn growers not so much
September 7, 2018
Agriculture Secretary Sonny Perdue announced the details of the $12 billion retaliatory tariff relief plan to offset the falling commodity prices that have followed tariffs imposed by China and other countries. Nebraska soybean growers will be receiving $1.64 per bushel to help offset the losses as a result of retaliatory tariffs, while corn growers expect to receive a single penny per bushel for theirs.
Jay Rempe, senior economist for the Nebraska Farm Bureau, estimates soybean payments at $548 million, given the U.S. Department of Agriculture's production estimates.
"It'll be some help for our soybean growers but when you look at the losses from the prices, there will still be some losses if prices don't improve," he said.
The bulk of Nebraska's soybeans are sold to China, with the only current movement being on old sales being delivered.
Rempe estimates losses to corn and soybean growers in Nebraska, with no improvement to prices, at $900 million to $1 billion. Rempe echoed the popular sentiment of "trade not aid."
"I think farmers are appreciative of the aid," he said. "They would rather see it come through markets and trade than through government payments. They're appreciative of the recognition that the tariffs have caused some harm in farm country."
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With NAFTA talks ongoing, corn growers stand to potentially benefit if an agreement is reached, he said. While it won't expand existing markets or open new ones, he said it could provide certainty and access to the growing Mexican market. With the majority of the state's corn going to Mexico, access is vital.
"The other thing the NAFTA renegotiation does is updates things in terms of biotech, which when it was originally drafted was a thing of our imaginations," he said.
A farm bill isn't vital to the current trade situation but would provide funding for marketing programs and trade promotion programs. Rempe said a farm bill could provide a backstop if the trade challenges continue.
Dale McCall, president of Rocky Mountain Farmers Union, has deep concerns over the distribution of the payments and the potential backlog to Farm Service Agency offices he said are already understaffed.
McCall, who sits at the helm of an organization that represents farmers and ranchers in Colorado, Wyoming and New Mexico, said the majority of the funds will be paid to soybean growers in the midwestern states.
"When it's limited primarily to soybeans in this first go-round, there's not a lot of benefit to our farmers and ranchers," he said. "While the soybean growers need the support, it doesn't benefit our folks to the extent we hoped."
McCall said the penny per bushel payments may not be worth pursuing for come growers. His main concern being for the FSA offices that remain understaffed, that will be expected to process the payments.
"They've been understaffed for some time and now we have this new process, they'll need to do with their staff that's already overburdened," he said. "We were hoping for better support for the corn growers."
McCall calls the payments a short-term Band-Aid, one that may benefit a few producers but is unlikely to cover all losses due to the tariffs. Another concern is consumers' belief that the government has "bailed out" the farmers, leaving the situation resolved when he said it's far from being so.
"While it's welcomed revenue, it's not recurring revenue," he said. "Bankers are not going to count this as recurring income because it's one time."
While that's helpful, he said, a strong farm bill that has a safety net for many commodities and livestock producers is what is needed. Certainty is the missing piece of the puzzle for the producers McCall has spoken to. However, when the cost of production is higher than the cash value, even certainty isn't enough.
"With the glut on the market and the tariff situation that being on all the uncertainty, it's a tough time for farmers and ranchers, especially young farmers and ranchers," he said. "With the average age of a farmer at 57 or 58 years old, we need to figure out ways we can keep young people involved. This financial stress is really tough on them."
McCall said he hopes to see a NAFTA renegotiation that includes agriculture rather than concentrating on other industries, like automobiles, also affected.
Colorado corn growers, according to Colorado Corn's marketing director Kim Reddin, are disappointed in the payments but are hopeful with new talks regarding year-round E-15.
Reddin said the National Corn Growers Association estimates losses to corn growers are about 44 cents per bushel although much of Colorado's corn supply stays in-state for livestock feed and ethanol use.
"A call for year-round E-15 would be far more beneficial," she said. "What growers in Colorado have been saying all along is 'we understand that some things need to be renegotiated.' China certainly did some things that were unsavory in the marketplace but overall we still need trade agreements and we still need to be able to let the market perform like it's supposed to and we need market access."
The same holds true for ethanol, she said, as growers want year round E-15 as it is made in the U.S., is a clean and renewable energy, and utilizes corn. ❖
— Gabel is an assistant editor and reporter for The Fence Post. She can be reached at email@example.com or (970) 392-4410.