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Farmers in Plains Lean Heavily on Trump Tariff Payments
Due to the trade war, more than a third of net farm income for Kansas farmers comes from Trump tariff payments, but that won’t make up for lost export sales, said Republican Sen. Jerry Moran on Monday. The second-term Republican was part of a Farm Belt chorus that, after applauding the end of a trade dispute with Canada and Mexico, called for trade deals with China, Japan, and the European Union.
“Many farmers and ranchers are on the verge of financial collapse,” said Moran in a letter to Agriculture Secretary Sonny Perdue. “The administration’s first and foremost priority ought to be to successfully resolve the ongoing trade disputes to provide greater market certainty for farmers and ranchers.”
The largest U.S. farm group said the removal of tit-for-tat tariffs in North America would enhance the prospects for passage of the United States-Mexico-Canada Agreement, the successor to NAFTA. “With this milestone reached, we urge negotiators to continue their work toward reopening markets with the European Union, China, and Japan,” said president Zippy Duvall of the American Farm Bureau Federation. “The Farm Bureau believes in fair trade. Eliminating more tariffs and other trade barriers is critical to achieving that goal.”
“As lawmakers turn to completing the task of passing USMCA, we continue to urge them to use their platform to raise the ongoing concerns over the still-present China tariffs,” said president Davie Stephens of the American Soybean Association.
In 2018, Trump tariff payments provided 37% of net farm income for producers who were part of the Kansas Farm Management Association, said a KFMA report this month. Affiliated with Kansas State University, the KFMA analyzes farm operations to improve financial performance.
“We have entered 2019 with continued expectations for market prices at levels that are below cost of production unless above-average yields are achieved. As such, the comfort level of many producers is not very high,” the report said.
At White House direction, the USDA created the trade payment program in 2018 to mitigate the impact of retaliatory Chinese tariffs on U.S. agriculture. Some $8.5 billion in cash has been paid to farmers so far. The USDA is spending $1.2 billion to buy surplus food for donation and it has awarded $200 million in grants for market development overseas. In all, roughly $10 billion will be spent out of $12 billion that was available.
A new round of payments, totaling $15 to $20 billion, is planned for this year while the administration tries to resolve the Sino-U.S. trade war. “President Trump is committed to supporting farmers in the meantime,” said Perdue during a Fox News interview last week. “The president’s commitment is for this year.”
In his letter, Moran pointed to the “inherent unpredictability” for ad hoc relief and said that is why producers prefer trade, not aid. When USDA designs this year’s aid package, “I urge you to include investments in international food aid programs, make certain payments to farmers do not distort planting decisions, and focus export promotion programs on new markets immediately available to producers,” said Moran.
The National Corn Growers Association said market prices for corn were 20¢ a bushel lower due to trade war than they would be otherwise. The gap widened to 40¢ a bushel in March and April of this year as U.S.-China trade tensions increased, it said.