What does the latest trade aid package mean for farmers?
Last week, the U.S. Department of Agriculture (USDA) released initial details for a new trade assistance package to support family farmers and ranchers struggling with oversupply and low prices due to escalating trade conflicts.
The agency plans to allocate as much as $16 billion from the Commodity Credit Corporation for the package, including $14.5 billion in direct payments to producers of certain commodities through the Market Facilitation Program (MFP).
Additionally, USDA has designated $1.4 billion for commodity purchases through the Food Purchase and Distribution Program (FPDP) as well as $100 million for the development of new export markets through the Agricultural Trade Promotion Program (ATP).
USDA has already issued two rounds of payments via MFP to soybean, sorghum, wheat, corn, pork, dairy, cotton, almond, and sweet cherry producers starting last fall. All of those commodities are also included in the new package, in addition to wide range of other products that were affected by the trade war, either directly or indirectly.
Eligibility and payment rates depend on the commodity. Most commodity grain producers will be compensated based on a flat county rate multiplied by total acreage of those crops in 2019, not to exceed 2018 plantings. In contrast, most specialty crop producers will receive payments based on 2019 production while dairy producers' payments will be based on historical production.
Payments will be distributed in three separate tranches, with the first expected in late July or early August. If USDA determines that additional assistance is still necessary, a second and third round of assistance may be implemented at a later date.
National Farmers Union (NFU) was encouraged by some of the improvements that the administration made over the previous trade aid package.
"We are pleased that USDA will be providing payments for a broader range of commodities than were covered under last year's program," said NFU President Roger Johnson in a statement. "We also appreciate that producers of all covered commodities will receive equitable support."
Though the USDA's support is much-needed, it will not provide long-term solutions many producers will need to withstand the lasting effects of the trade war.
"Our ongoing trade wars have destroyed our reputation as a reliable supplier and have left family farmers with swelling grain stores and empty pockets," said Johnson. "The very least we can do is provide our country's struggling food producers with the certainty of a longer-term plan that also addresses the persistent and pernicious problem of oversupply."