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Money Begins to Flow on Second Year of Trump Bailout of U.S. Agriculture

Two months after President Trump announced a $16-billion package to buffer the impact of the Sino-U.S. trade war on farmers and ranchers this year, the first driblet of the money is flowing — $100 million for market development. The awarding of the funds, announced by the USDA over the weekend, suggests the rest of the program could swing into operation in the days ahead.

The main component of the package is up to $14.5 billion in cash to producers of 28 commodities, from alfalfa and chickpeas to corn, soybeans, milk, and hogs. An additional $1.4 billion would be spent on foods affected by the trade war, including fruits, vegetables, beef, pork, lamb, and milk, with plans to donate those crops to food banks, schools, and outlets serving poor people.

Terms for qualifying for the payments are likely to follow on the heels of Monday’s deadline for growers to report how many acres they planted to various crops this year. “I would anticipate something shortly after the acreage planting deadline,” said Richard Fordyce, head of USDA’s Farm Service Agency, in a USDA Radio interview. The USDA has striven to keep its aid package from affecting planting decisions.

Agriculture is the only sector of the U.S. economy receiving a trade-war bailout. The USDA covers the cost of trade aid by withdrawing money from the Commodity Credit Corp., created during the Depression to bolster commodity prices, which is sometimes called “USDA’s bank.” In mid-June, Senator Debbie Stabenow questioned whether the USDA had enough money in the CCC to cover all of this year’s Trump tariff payments to farmers. She said the CCC had $7.7 billion left on its borrowing limit of $30 billion from the Treasury. Congress usually replenishes CCC funding each year as part of the USDA appropriations bill.

Four dozen groups received a share of the $100 million from the stop-gap Agricultural Trade Promotion Program. The largest awards went to the American Soybean Association, $12.7 million, and U.S. Meat Export Federation, $10 million.

“At USDA, we are always looking to expand existing markets or open new ones, and this infusion of money will do just that,” said Agriculture Secretary Sonny Perdue. “American farmers are so productive that we need to continue to expand our markets wherever we can to sell the bounty of the American harvest.”

Farm exports are forecast to drop by more than 4% this fiscal year to $137 billion, because of the trade war. One of every 3 bushels of soybeans grown by American farmers used to be exported to China, formerly the No. 1 customer for U.S. food and ag exports.

“Based on what I know, Chinese importers have started arrangement of purchasing US agricultural products,” tweeted Hu XiJin, editor in chief of Global Times, published in China under the aegis of the People’s Daily, the voice of the Communist Party. Hu did not say when purchases might begin or the amounts. “This is a prominent part from the Chinese side as the two countries have signaled good will to each other recently,” said Hu over the weekend.

Last week, Hu said China “is very insistent” that a trade deal must result in removal of all U.S. tariffs and the volume of Chinese purchases of U.S. goods “should be realistic.”

Senior U.S. officials, including Trump, have said throughout this year that China would buy huge amounts of farm exports as part of resolving the trade war, but the sales have not yet materialized.

For a Congressional Research Service report on the CCC, click here.

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