$16 billion in trade aid announced; county-by-county impact calculated
WASHINGTON — The Trump administration will make up to $16 billion in new direct payments to producers and commodity purchases under a trade assistance package that was expanded and significantly modified from the aid package announced last year in response to retaliatory tariffs imposed on U.S. farm exports.
Under the revised $14.5 billion Market Facilitation Program, payments will be made to producers of grain, oilseeds, cotton, rice, peanuts, alfalfa and other non-specialty crops based on a fixed rate for the county in which the producer farms and their 2019 planted acreage for those crops.
The payment rates will be based on USDA's calculation of the impact of the ongoing trade war on each county. USDA did not release the county rates. Under the 2018 payment plan, there were individual payment rates for production of each commodity.
Additional payments will be made to producers of milk, pork, tree nuts and some fruit. The payments to milk producers will be based on their production history and to pork producers on their hog inventory at a time that will be announced later. Payments for tree nuts, fresh sweet cherries, cranberries and fresh grapes will be based on farmers' 2019 acreage.
Bill Northey, USDA's undersecretary for farm production and conservation, said using county-by-county payment rates will avoid influencing farmers' planting decisions and will be easy for producers to understand and for USDA to administer.
The MFP payments will be dispensed in up to three rounds, with the first going out in July and August. The amount of the first round was not released. Whether the second or third rounds are made will depend on progress in the ongoing negotiations with China, said Agriculture Secretary Sonny Perdue.
The aid package "ensures that farmers will not bear the brunt of those trade practices by China or any other nation" that the administration is challenging, said Perdue.
Another $1.4 billion will be earmarked for purchase of fruits, vegetables, some processed foods, beef, pork, lamb, poultry and milk to be distributed to schools and food banks. Some $100 million will be used for foreign market promotion efforts.
The previous $12 billion trade package included MFP payments that were based on payment rates of $1.65 per bushel for soybeans, 14 cents per bushel for wheat, and 1 cent for corn.
There were also payments for cotton (6 cents per pound), sorghum (86 cents per bushel), dairy (12 cents per hundredweight), hogs ($8 per head), almonds (3 cents per pound) and fresh sweet cherries (16 cents per pound).
The full list of crops that will qualify for the new, county-based MFP payments: alfalfa hay, barley, canola, corn, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, upland cotton, and wheat.
USDA's chief economist, Rob Johansson, said the calculation of damage to farmers was based on a longer period and on more factors that were used in calculating the initial aid package. He said the details would be released later.
The dairy industry will be getting direct payments and also benefit from USDA purchases, but International Dairy Foods Association president and CEO Michael Dykes said producers far prefer a return to trade normalcy because China's commercial demand is expected to continue to increase.
"What we need is a predictable, transparent and rules-based system of international trade that provides the agricultural economy with certainty and a clear path to growth," Dykes said. "Most importantly, we must regain market share from our competitors who've benefited from these trade disputes. Over the next decade, China represents a $23 billion market opportunity for U.S. dairy."
But the aid is needed, he added. Heavily tariffed exports to China of U.S. cheese have fallen 44 percent in the past nine months and whey has dropped 32 percent, he said.
U.S. pork producers also expressed appreciation for the aid, but they are also desperate to see the trade war end because China's need for foreign pork is expected to skyrocket while it combats the swiftly spreading African swine fever.
"The current situation in China represents a historic sales opportunity for U.S. pork," said David Herring, president of the National Pork Producers Council. "The world's largest pork-consuming nation is currently experiencing a dramatic reduction in domestic supply because of an animal disease that has ravaged its national swine herd. We look forward to continued work with the administration to restore favorable access to China, allowing U.S. pork producers to capitalize on this opportunity, reduce our trade deficit with China and deliver enormous benefits to the U.S. economy."
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