Chance of trade war payments ‘less than 10%’
Agriculture Secretary Sonny Perdue said the odds of a multibillion-dollar round of trade war payments to farmers this year are “less than 10%,” although a senior lawmaker said the payments may be “absolutely vital” for survival in the Farm Belt. China will turn to the U.S. market for soybeans “late this spring, this summer,” Perdue predicted during a House Agriculture Committee hearing on Wednesday.
The Trump administration disbursed $23 billion in cash to farmers and ranchers to mitigate the impact of the trade war on U.S. agriculture in 2018 and 2019. Nearly half of farmers believe payments will be made this year, according to a Purdue University poll released this week.
“I would say, from my perspective, less than 10%,” Perdue told reporters when asked the odds of payments this year through the stopgap Market Facilitation Program. “I’m trying to emphasize for producers … to plant for the market.”
Perdue repeatedly told the House Agriculture Committee that China was revising regulations as a first step in complying with the Phase One Sino-U.S. agreement, so there was no reason to expect MFP payments this year. Democrats contended the message was muddied because of what President Trump said on social media on February 21: “If our formally targeted farmers need additional aid until such time as the trade deals with China, Mexico, Canada, and others fully kick in, that aid will be provided by the federal government.”
House Agriculture Chairman Collin Peterson said Trump’s comments “make me wonder what is going on with these trade deals.” Texas Representative Michael Conaway, the Republican leader on the panel, said, “I strongly believe that unless something gives here very soon, an announcement of an MFP III will be absolutely vital to the survival of our producers.”
The Phase One Sino-U.S. agreement, which took effect in mid-February, calls on China to buy $40 billion worth of U.S. food, agricultural, and seafood exports this year and in 2021, double the volume seen before the trade war.
“I am telling farmers not to anticipate” payments, said Perdue in his opening comments at the hearing. “Our goal is not to continue the Market Facilitation Program.”
There have been no major grain sales to China since Phase One was signed on January 15, although pork exports are surging. Lawmakers including Democrats Abigail Spanberger of Virginia and Cindy Axne of Iowa described skepticism among their farm constituents about regaining sales to China. By contrast, Republican Mike Bost of Illinois said he believes the trade deals “are going to help very tremendously with our farmers.”
China traditionally takes advantage of low soybean prices in Brazil in the early months of the year and then turns to U.S. suppliers, said Perdue. “We think they will come to the market in late spring, this summer,” he said.
Asked by Spanberger if the USDA was prepared for a worst-case scenario, Perdue replied, “That was the essence of the president’s tweet.”
Also during the hearing, Perdue said the USDA might hold an additional signup for the land-idling CRP if necessary to meet its goal of expanding enrollment to 24.5 million acres this year. A so-called general enrollment, for fields and large tracts, ended on February 28, and a Conservation Reserve grasslands signup opens on March 16.
Democrats Marcia Fudge of Ohio and Jim McGovern of Massachusetts criticized three administration plans, shepherded by Perdue, that would end SNAP benefits for 3.1 million people through tighter eligibility rules. The first of the regulations, which would affect 700,000 able-bodied adults without dependents, takes effect on April 1.
“I ask, where is your commitment to feeding everyone?” asked Fudge. Republican Jim Hagedorn of Minnesota said, “We want everybody in the workforce. It is a compassionate thing.”
To watch a video of the hearing, click here.