Midwest Scores Big on Trump Tariff Payments
Nearly half of the $4.7 billion in Trump tariff payments will go to five midwestern states that are the largest soybean and hog producers in the country, said a farm group analysis on Tuesday. At the same time, an environmental group challenged the USDA to explain its opaque development of the bailout package. The USDA also announced that around Dec. 3, it will announce details for a second round of payments, if it is needed.
Groups representing corn, wheat, and produce growers said the payments outlined by Agriculture Secretary Sonny Perdue were inequitable. President Trump pledged last winter to shield U.S. agriculture from retaliatory tariffs imposed by China and other trading partners in response to U.S. duties on imported steel and aluminum. The White House, which has accused China of pirating U.S. intellectual property, has placed additional steep duties on a wide range of Chinese products.
“Combined, Illinois, Iowa, Minnesota, Indiana, and Nebraska are estimated to receive more than $2.1 billion, or 45 percent, of the first round of MFP [Market Facilitation Program] payments,” said economist Veronica Nigh of the American Farm Bureau Federation, the largest U.S. farm group. Based on the payment rates announced by the USDA and on the most recent USDA production data for the seven commodities — cotton, corn, milk, hogs, soybeans, sorghum, and wheat — eligible for payments, Nigh calculated that Illinois would receive $597 million, Iowa $578 million, Minnesota $360 million, Indiana $312 million, and Nebraska $305 million.
Soybeans accounted for the great majority of the prospective payments in those states, just at it dominates the USDA’s estimates of disbursements. Chicago commodity analyst Jerry Gidel said an Illinois grower with slightly more than 2,300 acres of soybeans — a large but not uncommon-sized operation — would hit the USDA limit of $125,000 of aid per person, based on the USDA’s plan to pro-rate payments this fall.
“The initial payment rate will apply to the first 50 percent of the producer’s total production of the selected commodity. On or about Dec. 3, 2018, CCC [the Commodity Credit Corp., known as the USDA’s bank] may announce a second payment rate, if applicable, that will apply to the remaining 50 percent of the producer’s production for the selected commodity,” said the USDA in setting a signup period of Sept. 4 to Jan. 15.
The Environmental Working Group filed a public-records request for all USDA records, including emails, text messages, meeting agendas, and draft legislation, pertinent to the agency’s decision to make up to $12 billion available to producers and its plans on how to divide it. “The American people deserve to know exactly how the Trump administration devised this scheme,” said the EWG’s Scott Faber.
“It’s safe to assume the bulk of the money will flow to the wealthiest agribusiness operations and city slicker farmers — not to the struggling family farms that need the most relief from the president’s ill-conceived trade war,” he said.
In its 23-page “final rule” on the tariff bailout, the USDA included a two-paragraph summary of its reasoning. Payment rates for each commodity, it said, “will reflect the severity of the impact of trade disruptions to that commodity and the commodity-specific period of adjustment to new trade patterns.” The USDA said it took into account the percentage of each commodity that is exported, the portion affected by trade disruption, and variables such as stocks-to-use ratios for crops.
Normally, one-third of the U.S. soybean crop goes to China, and nearly half of all U.S. soybeans are exported. But large parts of the wheat, sorghum, and cotton crops are also exported. The soybean stockpile is forecast to grow by 85 percent in the year ahead. Wheat and corn growers face large stockpiles already.
The National Corn Growers Association said the USDA payment rate of 1 cent a bushel for corn “would be insufficient to even begin to address the serious damage done to the corn market as a result of the administration’s actions.” The National Association of Wheat Growers said the package, with its 14-cents-a-bushel payment for wheat, “poorly reflects the reality that all farmers are being harmed by tariffs.”
“We are still analyzing the details of this plan, but at first glance it appears USDA’s mitigation efforts will fall substantially short of making fruit, vegetable, and tree nut farmers whole for the damages they have incurred, and will continue to incur, as a result of the trade war with China,” said the Western Growers Association. It cited an estimate of direct trade losses of $2.6 billion for fruit, vegetable, and nut producers.
The USDA said it will buy $1.2 billion worth of produce, juice, peanut butter, and nuts to help specialty crop growers. It will also spend $200 million to develop new markets overseas, for a total expenditure of $6.2 billion.
Almonds, the biggest farm export from California, “landed on a list of commodities with ‘program details yet to be determined,’ with a targeted purchase amount of $63 million,” said Mother Jones. “Meanwhile, two GOP-controlled Congressional seats in California’s almond-happy Central Valley are in danger this fall.” It pointed to Rep. Jeff Denham, a member of the House Agriculture Committee, and Rep. David Valadao, a member of the House Appropriations subcommittee overseeing the USDA budget.
To read the Federal Register announcement of the signup period for payments, click here.
For the USDA’s final rule on its Market Facilitation Program, click here.
For the USDA’s final rule on its Agricultural Trade Promotion Program, click here.