USDA announces $12 billion trade mitigation plan for ag producers
July 24, 2018
Soybeans, corn, wheat and hogs are among the agricultural commodities that stand to benefit from three USDA programs designed to benefit producers most significantly affected by trade disruptions and retaliatory tariffs.
The Market Facilitation Program, administered by the Farm Service Agency, that will provide payments to these producers will be aimed at assisting those who grow soybeans, sorghum, corn, wheat, cotton, as well as dairymen and hog producers. The Food Purchase and Distribution Program, administered by the USDA through the Agricultural Marketing Service, will purchase food commodities that can be distributed to food banks and nutrition programs, including fruits, nuts, rice, legumes, and some beef, pork, and dairy. The Trade Promotion Program, administered by the Foreign Agriculture Service, will target all commodities to build domestic and foreign markets, a process in which commodity groups will provide involvement.
"Nearly all segments of U.S. agriculture are being affected by these retaliatory actions and so we want to find alternative customers across the board for them," said Jason Hafemeister, USDA trade counsel to the secretary.
The programs, which will move forward with congressional notification but not requiring congressional approval, takes advantage of existing authorities of the USDA under the Commodity Credit Corp. Charter Act, Section 5.
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Payments will be calculated based on actual 2018 production multiplied by a payment rate for producers of soybeans, sorghum, corn, wheat, cotton, as well as dairymen and hog producers. The programs, estimated at $12 billion, will likely be primarily supportive of soybean production, a market that has been the most significantly affected, with most resources going to the Market Facilitation Program.
"We need producers to harvest to know their production so we can calculate the payment," said Brad Karmen, USDA assistant deputy administrator for farm programs.
Few segments of U.S. agriculture have gone unscathed by trade disruptions and what the USDA calls unfair retaliatory tariffs.
"We've calculated the damages to producers as a result of these illegal tariff actions," said Rob Johannson, USDA chief economist. "We are working out specific details and will be publishing that as part of a rule-making action in a couple of weeks."
The forthcoming information will include rates of payment and sign-up details with flexibility for potential trade deals negotiated by the Trump administration in the coming weeks.
"The programs are based on the current trade conditions that are in place as well as looking at the impact that's had on today's price," said Greg Ibach, undersecretary for marketing and regulatory programs. "This is a short-term program and we're hoping as a result of this program, farmers and ranchers can address immediate financial stress they may be under."
Some of the financial stress, Hafemeister said, stems from farmers seeking new buyers for their products and the costs incurred through additional storage and handling costs.
Some Republican lawmakers contend that the program will not be sufficient for farmers in lieu of trade deals. Hafemeister said the Trump administration's recent actions have provided new leverage with the objective of the reform of the policies of other countries.
"What this will do is provide some hope to farmers and ranchers that the president and the secretary do have their back," Ibach said. "We hope it will allow time to conclude trade negotiations that will indeed open those markets and restart trade."
It is Ibach's hope that other countries will see the seriousness with which the U.S. is approaching trade negotiations and prompt them to approach the table to negotiate in good faith, allowing American agriculture to move forward.
The original timeframe for announcing assistance programs was Labor Day though this earlier announcement is not an indication that trade negotiations are going poorly, Ibach said.
Ibach said USDA has been analyzing options since about April when President Trump asked Secretary Purdue to start looking at what type of mitigation might be possible from the USDA. He calls the plan a "great, three different component plan that will be able to address some of our agricultural producers' immediate concerns."
"Since we had a good plan in place, we decided to go ahead and make the announcement so farmers and ranchers understand that USDA, Secretary Purdue, and the president have made good on their promise not to leave farmers and ranchers at the tip of the spear," Ibach said.
Labor Day will remain the potential date for the kick-off of these programs which Ibach said is consistent with Secretary Perdue's earlier comments. ❖
— Gabel is an assistant editor and reporter for The Fence Post. She lives on a farm near Wiggins, Colo., where she and her family raise cattle and show goats.