Program buys time for striking long-lasting trade deals

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WASHINGTON D.C. - U.S. Secretary of Agriculture Sonny Perdue provided details on Aug. 27 of U.S. Department of Agriculture (USDA) assistance programs for farmers hit in the trade war.

Perdue said President Trump directed him to craft a short-term relief strategy to protect agricultural producers while the Administration works on free, fair, and reciprocal trade deals to open more markets in the long run to help American farmers compete globally.

“Early on, the President instructed me, as Secretary of Agriculture, to make sure our farmers did not bear the brunt of unfair retaliatory tariffs. After careful analysis by our team at USDA, we have formulated our strategy to mitigate the trade damages sustained by our farmers. Our farmers work hard, and are the most productive in the world, and we aim to protect them,” said Secretary Perdue in a news release.

The plan, part of the $12 billion in programs announced last month, includes tools for direct payment to farmers, a distribution plan to buy certain commodities and distribute them through food assistance programs and a program to help develop foreign markets.

Announcement of the program details came with mixed reviews from agriculture groups. 

National Farmers Union (NFU) echoed requests to develop "a long-term support mechanism." While the aid package will begin to help many farmers, they need "strong markets and long-term certainty," said Rob Larew, NFU Senior Vice President of Public Policy and Communications.

"This trade war has already caused irreparable, long-term harm to what were strong trade relationships for American family farmers and ranchers," Larew said. "As a result, farm prices continue to plummet for U.S. farm goods, and our competitors are putting more land into production to fill the void."

American Farm Bureau Federation (AFBF) President Zippy Duvall called the package a "welcome relief from the battering" farmers and ranchers are taking in the trade war.

"Today’s aid announcement gives us some breathing room, but it will keep many of us going only a few months more. The real solution to this trade war is to take a tough stance at the negotiating table and quickly find a resolution with our trading partners. If we’re going to turn our farm economy around for the long-term, we need to open more export markets with fair trade deals, and the sooner, the better,” said Duvall.

“President Trump has been standing up to China and other nations, sending the clear message that the United States will no longer tolerate their unfair trade practices, which include non-tariff trade barriers and the theft of intellectual property,” said Perdue. “It’s important to note all of this could go away tomorrow, if China and the other nations simply correct their behavior. But in the meantime, the programs we are announcing today buys time for the President to strike long-lasting trade deals to benefit our entire economy.”

Market Facilitation Program

The Market Facilitation Program (MFP)will provide payments totalling nearly $4.7 billion to corn, cotton, dairy, hog, sorghum, soybean, and wheat producers starting Sept. 4, 2018. An announcement about further payments will be made in coming months, if warranted. 

Under the MFP program soybean farmers would get more than $3.6 billion with the initial payment rate of $1.65/bushel. Pork is the next highest paid commodity totalling more than $290 billion at an initial rate of $8 per head. 

Cotton producers are looking at 6 cents a pound with a total initial payment of nearly $276,900,000. The total payments for sorghum are estimated at $156,800,000 ($0.86/bushel), milk at $127,400,000 ($0.12/cwt); wheat at $119,200,000 ($0.14/bushel) and corn $96,000,000 at 1 cent per bushel, according to the USDA.

Interested producers can apply after harvest is 100 percent complete and they can report their total 2018 production. Beginning Sept. 4 of this year, MFP applications will be available online at www.farmers.gov/mfp. Producers will also be able to submit their MFP applications in person, by email, fax, or by mail.

The initial MFP payment will be calculated by multiplying 50 percent of the producer’s total 2018 actual production by the applicable MFP rate.

Shot in the arm for soybean farmers

The American Soybean Association (ASA) welcomed the news of the program. 

“This will provide a real shot in the arm for our growers, who have seen soybean prices fall by about $2 per bushel, or 20 percent, since events leading to the current tariff war with China began impacting markets in June,” said ASA President John Heisdorffer. “While this assistance package will definitely help our farmers get through the bad patch we’re currently facing, we must remain focused on market opportunities in the long term."

Heisdorffer said the expected value of the 2018 soybean crop has been "under increasing pressure ever since tariffs were imposed first by the U.S. and then by China on July 6."

In the last two months, USDA has raised its estimate for 2018 soybean production to record levels and reduced its estimate for soybean exports, according to the ASA. 

Heisdorffer also emphasized that, “ASA strongly supports USDA’s initiative to provide an additional $200 million to develop foreign markets through a Trade Promotion Program. Increasing funding for market development has been a top ASA priority for this year’s farm bill and is even more critical given the need to find new export markets for U.S. soy and livestock products.”

No relief for corn farmers

The National Corn Growers Association (NCGA) said the plans unveiled by the USDA would be insufficient to even begin to address the serious damage done to the corn market because of the Administration’s actions.

NCGA President and North Dakota farmer Kevin Skunes said most members prefer trade over aid, but support relief if it helps farmers get through another planting season.  

“Unfortunately, this plan provides virtually no relief to corn farmers," said Skunes. “NCGA has understood from the beginning that this aid package would neither make farmers whole nor offset long-term erosion of export markets. But, even with lowered expectations, it is disappointing that this plan does not consider the extent of the damage done to corn farmers.”

According to an NCGA-commissioned analysis, trade disputes are estimated to have lowered corn prices by 44 cents per bushel for crop produced in 2018, amounting to more than $6 billion in lost value on the projected harvest for 2018. 

“Once again, we are calling on the Administration to settle trade disputes and support a strong Renewable Fuel Standard," added Skunes. "These no-cost, immediate actions would deliver a real win for rural America.”

Plan falls short for dairy producers

National Milk Producers Federation (NMPF) President Jim Mulhern said "dairy producers are greatly disappointed that the farmer aid portion of today’s trade relief package does not adequately address the harm done to dairy."

“The dairy-specific financial assistance package provided by USDA — centered on an estimated $127 million in direct payments — represents less than 10 percent of American dairy farmers’ losses caused by the retaliatory tariffs imposed by both Mexico and China," said Mulhern. “The price drop resulting from these tariffs has not been gradual — it’s hurting U.S. dairy producers right now and will continue to do so. Since the retaliatory tariffs were announced in late May, milk futures prices have lost over $1.2 billion through December 2018. Milk prices for the balance of the year are now expected to be $1.10-per-hundredweight lower than were estimated just prior to the imposition of the tariffs on U.S. dairy exports."

Payment for dairy production is based off the historical production reported for the Margin Protection Program for Dairy (MPP-Dairy). For existing dairy operations, the production history is established using the highest annual milk production marketed during the full calendar years of 2011, 2012, and 2013.

Dairy operations are also required to have been in operation on June 1, 2018 to be eligible for payments. 

“Dairy farmers are particularly vulnerable to downward price swings because, unlike crop farmers who harvest once a season, dairy producers harvest and market their product daily," added Mulhern. "If farmer incomes continue to suffer as projected, we will lose more farms."

Mulhern also pointed to the value of the product purchase program and the Trade Promotion Program as "important elements of the overall package," vowing to continue working with the USDA to support dairy farmers’ prices in light of the harm caused by retaliatory tariffs. 

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Food Purchase, Distribution Program

AFood Purchase and Distribution Program will purchase up to $1.2 billion in commodities unfairly targeted by unjustified retaliation. USDA’s Food and Nutrition Service (FNS) will distribute these commodities through nutrition assistance programs such as The Emergency Food Assistance Program (TEFAP) and child nutrition programs.

The amounts of commodities to be purchased are based on an economic analysis of the damage caused by unjustified tariffs imposed on the crops listed below. Their damages will be adjusted based on several factors and spread over several months in response to orders placed by states participating in the FNS nutrition assistance programs.

Commodities in the food purchase program at this time include apple, beef, cranberries, dairy, kidney beans, pork, potatoes, strawberries, and sweet corn, a USDA news release said.

Products purchased will be distributed by FNS to participating states, for use in USDA nutrition assistance programs.

Agricultural Trade Promotion Program

The Foreign Agricultural Service’s (FAS) Agricultural Trade Promotion Program (ATP) will make available $200 million to develop foreign markets for U.S. agricultural products. The program will help U.S. agricultural exporters identify and access new markets and help mitigate the adverse effects of other countries’ restrictions.

The FAS will administer the ATP, which will provide cost-share assistance to eligible U.S. organizations for activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research, and technical assistance.

Applications for the ATP will be accepted until Nov. 2, 2018 or until funding is exhausted. Funding should be allocated to eligible participants in early 2019. 

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