After Ups and Downs, Farm Groups Look for Finality on Trade
As lawmakers become more vocal in criticizing Trump tariff payments, U.S. farm groups increasingly are quiet on trade issues. The reasons range from weariness to uncertainty over what’s to come, whether it’s the Sino-U.S. trade war, congressional approval of the USMCA with Canada and Mexico, or implementation of new ag trade rules with Japan, say analysts and farm group officials.
“Everybody feels like we’re getting closer to the end,” said Dale Moore, executive vice president of the American Farm Bureau Federation, the largest farm group. He described a mood of anxiety in farm country – “Where’s the resolution on the trade front?” – after months of twists and turns in negotiations. Agriculture is one of China’s prime targets for retaliatory tariffs.
Only two major U.S. farm groups commented on release of a new round of trade-war payments last week and one of them, the National Farmers Union, pointed to flaws in the Market Facilitation Program (MFP), the official name for the payments. “We need more permanent solutions than this current plan can provide,” said the NFU.
In the early days of the trade war, farm groups coupled expressions of appreciation for billions of dollars in trade-war payments with calls for removal of tariffs and restoration of ag exports. There have been fewer statements about the trade war in recent months. A farm leader said there were secondhand accounts that “folks have been warned to say only nice things.”
Meanwhile, Senate Democrats challenged the stopgap MFP payments, which are drawn out of a seemingly bottomless account at the USDA, as “picking winners and losers between regions and crops.” Oregon Sen. Jeff Merkley scored a congratulatory tweet by President Trump about the new $3.6 billion tranche of MFP payments as “manure piled high & deep…Trump has been using your tax $ as a political slush fund to help his allies in the South, instead of farmers in the Midwest who’ve been devastated by his poorly crafted trade strategy w/ China.”
In his tweet, Trump said, “Our great Farmers will recieve (sic) another major round of ‘cash,’ compliments of China Tariffs, prior to Thanksgiving. The smaller farms and farmers will be big beneficiaries. In the meantime, and as you may have noticed, China is starting to buy big again. Japan deal DONE. Enjoy!”
Critics say Trump is wrong on many counts: U.S. importers, not China, pay the tariffs, large operators will receive a greater share of the payments than smaller farmers, sales to China are far lower than before the trade war, and the Japanese parliament has yet to approve the new trade pact. Jiji Press says a vote is likely this week.
Farmers voted for Trump in landslide numbers in 2016 and the president remains popular with them. One analyst, speaking on condition of anonymity, said grassroots support for Trump, who has delivered on promises of tax cuts and regulatory relief, might deter farm groups from making adverse statements about trade developments.
Chinese officials are pessimistic about a Sino-U.S. trade deal because Trump is reluctant to roll back U.S. tariffs, reported CNBC. China says a “phase one” trade agreement is contingent on tariff relief. The White House says China must commit to buying up to $50 billion of U.S. farm exports in two years as part of the agreement.
Farm groups may be holding their tongues while waiting for clarity on the trade front, said economist Joe Glauber of the IFPRI think tank. The former USDA chief economist noted the administration is spending billions of dollars on Trump tariff payments “without any real discussion.”
“It looks like an overpayment to me for a variety of reasons,” said Glauber, who has studied the question whether the payments violate WTO limits on trade-distorting subsidies. The administration spent $10 billion to mitigate the impact of the trade war on the agriculture sector in 2018, the bulk of it in cash payments to farmers and ranchers, and is offering up to $16 billion to offset trade damage to this year’s production.
As of Monday, the USDA has paid $6.9 billion to farmers and ranchers. The leading state was Iowa with $766.5 million, followed by Illinois with $706.6 million, Minnesota with $519 million, Texas with $497 million, and Kansas with $472 million.