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UPDATE 2-Farm bill could be used to shield U.S. farmers from trade spat -senator

(Adds comments by USDA official and analyst, background on farm
bill, other details)

By Tom Polansek

OVERLAND PARK, Kan., April 6 (Reuters) - U.S. Senator Jerry
Moran of Kansas said he assumes the Trump administration would
try to use U.S. farm bill legislation, which helps farmers
withstand economic slumps, to shield the sector in a growing
U.S.-China trade dispute.

However, no specific proposals for protecting farmers have
been suggested as of yet, and lawmakers and the agricultural
industry said the escalating trade battle could add to
uncertainty in coming months.

The farm bill, the U.S. government's main food and
agricultural policy mechanism, is up for renewal this year. The
bill typically uses crop insurance and other programs to help
farmers withstand economic slumps.

Moran, a Republican, spoke on the sidelines of a
commodities conference in Kansas on Friday. He said he would
support help for farmers, even though taxpayers would have to
foot the bill for additional support for agriculture.

He added that the "better way to handle this is not to put
the farmer in the damaging position in the first place."

Beijing rattled grain and oilseed markets on Wednesday by
threatening extra levies on U.S. goods including soybeans, the
most valuable U.S. farm export to China, in retaliation for
earlier U.S. trade actions. Fears later eased as many cited
China's reliance on U.S. soybeans.

But on Friday, China warned it was fully prepared to respond
with a "fierce counter strike" if the United States follows
through on President Donald Trump's latest threat on Thursday to
impose tariffs on an extra $100 billion in Chinese goods.

The administration has said it would find a way to protect
farmers, but U.S. Department of Agriculture Under Secretary Bill
Northey told Reuters on Thursday there were no specific plans
yet. "There's a lot of different options out there," he said.

On Thursday, before Trump threatened the extra tariffs, U.S.
Senator Pat Roberts, also of Kansas, said the trade conflict
created a background of uncertainty for negotiating the farm
bill. The current bill was passed in 2014 and was expected to
cost $489 billion over five years; it expires at the end of
2018.

"Farmers have to have some degree of predictability and
stability," he said on the sidelines of the U.S. Commodity
Futures Trading Commission conference in Kansas. "This kind of
environment certainly doesn't provide that."

Soybean futures have dropped 1.5 percent over the last five
days as the dispute has heated up. "If (farmers) are worried
about the price that they’re going to get eventually, they’re
going to invest less, they’re less likely to spend on fertilizer
and seed, though most of those decisions have been made
already," said Jonas Oxgaard, senior analyst at Sanford C.
Bernstein & Co.

Added Roberts, referring to the imminent expiration of the
farm bill and the possibility of a trade war: "This is not a
good situation. It just isn't."

(Reporting by Tom Polansek in Overland Park, Kansas; additional
reporting by Ayenat Mersie in New York
Writing by David Gaffen
Editing by Susan Thomas and Matthew Lewis)

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