New Trump aid plan for U.S. farmers to rely on direct payments: sources

15 May 2019

New Trump aid plan for U.S. farmers to rely on direct payments: sources

By Humeyra Pamuk and Chris Prentice

WASHINGTON The Trump administration's second package of aid for U.S. farmers hit by the trade war with China is expected to have a similar structure to last year's program, using direct payments and commodity purchases, industry sources briefed on the plan said.

The U.S. Department of Agriculture is still finalizing the plan, which is likely to prioritize hog and soybean farmers, the products most affected by the trade dispute between China and the United States.

The world's two largest economies have been embroiled in a 10-month trade war that has cost billions, roiled global supply chains and rattled financial markets. American farmers, who helped carry President Donald Trump to his surprise 2016 election win, have been among the hardest hit.

The USDA in 2018 pledged up to $12 billion in aid to farmers to help offset their crop losses and has to date paid $8.52 billion. Trump has said the next round of aid could reach $15 billion.

The United States hiked tariffs on $200 billion worth of Chinese goods last Friday, escalating the trade dispute as the latest round of talks in Washington to resolve it ended with no progress. Beijing responded with retaliatory tariffs, and the escalation may not be over.

Earlier this week soybean prices fell to their lowest in a decade, while benchmark cotton futures dropped to a three-year low.

One industry source briefed on the plan said it was likely to feature a purchasing and direct payments program through USDA’s Commodity Credit Corporation, a Depression-era program created to support farm income, rather than going through Congress to approve the funds.

"This package seems to be driven much more by what's going in with China," one of the sources said. "Therefore you might see the payment rates or the percentage rate that each commodity could get quite a bit different," he said.

The USDA did not respond to requests for comment.

(Graphic: Charting the trade warhttps://tmsnrt.rs/2TkUDjk)

'FAST-TRACK'

While the White House had discussions about another round of aid, no plan was in the works at USDA until last week when Trump announced the second package, one of the sources said, adding that soybean and pork producers were likely to be prioritized.

Kirk Leeds, chief executive of the Iowa Soybean Association, said the USDA had contacted it and other farm groups for suggestions on a new package last week.

"The program they had before made a lot of sense,” Leeds said. "My anticipation is it'll look very similar to the payments that we had before."

The Trump administration wants any trade deal with China to include purchases of more than $1.2 trillion worth of American products, including agricultural commodities and industrial goods.

The countries appeared on track for an agreement before relations soured earlier this month. Sources said Beijing had backtracked on a series of commitments, prompting the United States to implement a previously delayed hike in tariffs on $200 billion worth of Chinese goods.

The "dynamic changed suddenly," a second source said, noting that USDA officials were racing to put something together.

Prolonged economic pain across the American farm belt could complicate Trump’s re-election efforts. Farmers have been key supporters of the president, even as his actions on U.S. trade policy have sunk key crop prices.

One of the sources said an announcement was likely to come next week.

Ted McKinney, the USDA's undersecretary for trade, told a gathering of the National Association of Farm Broadcasting on Tuesday the new package would be ready in days, "not weeks or months," industry publication Agri-Pulse reported.

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