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China May Agree to Buy U.S. Ag Exports, But a Final Tranche of Cash to Farmers is Still Likely

Secretary Sonny Perdue said he expects producers will still receive the final $3.6 billion in trade war payments that President Trump authorized last spring.

On the same day that China and the U.S. tentatively reached a Phase One agreement on a trade deal, Agriculture Secretary Sonny Perdue said he expects producers will still receive the final $3.6 billion in trade war payments that President Trump authorized last spring. A formal announcement of the agreement, including a Chinese promise to buy more U.S. farm goods, was expected today.

Perdue said “we have not seen” a rally in commodity prices that would preclude “the need for the third tranche after the first of the year,” according to USDA radio news. The administration has released all but $3.6 billion of the $14.5 billion that was earmarked to offset the impact of the trade war on 2019 crop and livestock revenues.

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“If we can get a deal with China and if markets move, if we can accumulate these trading relationships that we have and we get back to more stable trade relationships, I would be hopeful we would not need a third Market Facilitation Program,” said Perdue, using the formal name for the trade war payments. The administration sent $8.6 billion to producers for 2018 losses and $10.5 billion so far this year. Perdue spoke to reporters at a farm conference in Omaha, Nebraska.

The Phase One agreement would call for the U.S. to reduce rates by as much as half on tariffs already in place on Chinese imports and to forgo tariffs scheduled to take effect on $160 billion worth of consumer products, such as smartphones, on Sunday, according to published reports. For its part, China would significantly increase its purchases of U.S. ag exports, do more to stop intellectual property theft, and allow greater U.S. access to its financial services market.

In October, Trump said China would buy up to $50 billion in U.S. ag products over two years as part of the Phase One pact. Before the trade war, China bought about $21 billion a year in U.S. agricultural goods. Some have questioned whether U.S. farmers could boost production enough to satisfy Chinese demand or whether the commitment to China would mean diverting commodities from other customers.

Perdue said U.S. agriculture would see “a real bonanza” if the sales took place, reported DTN/Progressive Farmer. “A broad spread of sectors are going to benefit from a China deal if we’re able to get that done,” he said at the Farmers Business Network conference.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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