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Perdue Says Trump is ‘Delivering on a Promise’ with $12 Billion in Farm Aid

Secretary of Agriculture Sonny Perdue began his remarks at the 2018 Ag Transportation Summit by acknowledging the $12 billion of federal aid for farmers that was recently announced in the wake of ongoing trade tensions with China last week.

“President Trump has promised since day one that he would have the back of every American producer, farmer, rancher, and yesterday, I think he delivered on that promise,” Perdue said.

While some have accused Trump of starting a trade war, Perdue is adamant that China is to blame calling their retaliatory tariffs “unjustified” and “illegal.”

“Some people say, ‘Well, you all started this.’ Not exactly, China started this many years ago,” Perdue told the crowd.

He explained further. “One of the metaphors that rings true in my mind, as a sports enthusiast, is when playing basketball and the referee calls a foul and I go to the foul line to shoot a free throw. Then, the other team comes and fouls me while I'm shooting the free throw. That's what I think China has done in conjunction with these retaliatory tariffs,” he said.

Even before tariffs were implemented, the administration knew farmers would feel the effects.

“Unfortunately, America’s agricultural producers had been treated unfairly by illegal trading practices by China and, as I said, other nations. We know because we are an export surplus in agriculture, because of the productivity of our American ag, producers have taken a disproportionate hit when it comes to unjustified retaliatory measures and tariffs. We frankly knew that would be the case, and that's what's happened.”

The secretary also emphasized the aid package is a short-term solution that will buy Trump and negotiators time to work out long-term trade agreements.

“Is that the final deal?” Perdue asked rhetorically. “No, that's a temporary measure to make sure that we can complete these trade resolutions and issues in a favorable way.”

Later he added, “I hope this is a clear signal that China cannot bully our farmers in order to coerce Americans caving in politically.”

$12 Billion Details

Last week, Perdue said USDA will be authorizing up to $12 billion in programs to offset the $11 billion impact USDA economists say U.S. producers have felt since China implemented tariffs on a number of U.S. products.

At the same meeting, media pressed the secretary to explain how the USDA arrived at those numbers.

“Our calculation was the trade disruption damage. We saw where the markets were, and it’s more than just market prices. Our economists have models that are able to skim off what trade disruption damage is. The commodity markets are volatile every day. Everybody in the grain trade knows that, but our calculations of the trade disruption from the unjustified, illegal retaliatory tariffs, we believe probably accomplished about $11 billion,” Perdue responded.

He continued, “We’re not trying to replace farm income per se. This is a temporary stop in order to get our producers to a point of profitability again.”

Others asked the secretary to explain what will happen if a trade agreement is not reached with China soon. They asked if more aid would be made available to farmers down the road.

“We know that these markets will equilibrate over a period of time, as they always do, but these are things that producers, when they planted in the spring, had no idea that were coming about,” Perdue explained. “Farmers are smart. They will make their planting decisions for 2019 based on where the markets look like they are there, and, therefore, we don’t expect as much trade disruption damage in the future.”

The aid program is scheduled to start after Labor Day on September 4, Perdue said last week. Farmers can expect details about what they need to do to participate in the middle of August.

Three-Part Allocation

Perdue said last week that $12 billion in funds will be allocated in three parts.

Some of the money will be designated for payments to farmers who grow soybeans, wheat, corn, and cotton. Funds will also be available for some dairy and pork producers, Perdue said.

Another portion of the funds will be used for market procurement and distribution. To support the market for specialty crops, fruits, and nuts, crops will be purchased for school lunch programs and food banks.

Finally, money will be set aside to aggressively develop more markets. “Some money is going to be devoted in a cost-sharing way with industry groups to go find other markets to sell our goods in, not being dependent on China specifically,” he said.

Producers Will Not Be Made Whole

In more recent report from Reuters, Perdue was quoted saying, “Obviously, this is not going to make farmers whole.”

During a media call on Monday, Perdue explained himself saying, “I liken it to any kind of insurance claim. If you have a crash in your car and it is totaled, you get a check from the insurance company, but most of us never feel like we were made whole. The same thing with a house fire. We can get a check, but we never feel like it really replaces all that we lost in that regard.”

He continued, “I think we’re just trying to make the expectation that if farmers see a $2 drop in soybean prices, then they should not necessarily expect a $2-per-bushel mitigation payment.”

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