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USDA Offers Explainer on $16 Billion Trade War Buffer to Farmers

Payment rates to be announced later.

USDA sets trade aid at $16 billion, more possible in future.

The Trump administration will spend up to $16 billion to buffer the impact of trade war on farmers and ranchers this year and billions of dollars of additional aid may flow in the future, said Agriculture Secretary Sonny Perdue on Thursday. “That depends on China.”

Some $14.5 billion will be available to producers of row crops, fruits, vegetables, nuts, pork, and dairy, said Perdue and a half dozen senior USDA officials during a teleconference. The government will send $1.4 billion to buy and donate surplus crops to food banks and schools. And it will award $100 million in grants to develop new markets overseas.

The three-prong structure is similar in design and name to the 2018 Trump bailout payments that were supposed to be a one-time boost. That package has paid $10 billion, mostly in cash to producers. The new package covers three dozen commodities compared with the nine earmarked for aid in 2018. For this year, the USDA says it will calculate trade war damage per county and divide the money among farmers based on how many acres of the eligible crops are planted this year. The USDA will announce the payment rates later.

“It will vary county to county,” said Undersecretary Bill Northey, partly because the mix of crops and their value varies across the country. The payment rate within a county will be the same to all farmers, regardless of what crops they plant. The so-called single payment rate was intended to assure farmers of aid without influencing their planting decisions.

“You won't receive payments if you don’t plant,” said USDA chief economist Robert Johansson. The USDA said it will limit crop acreage eligible for payments this year to the amount of land planted in 2018.

USDA officials did not mention payment or eligibility limits for the new round of trade aid. A USDA spokesman was not immediately available to comment. Most USDA farm subsidies limit farmers to a maximum of $125,000 apiece and people with an adjusted gross income above $900,000 are not eligible.

“This Rube Goldberg mess seems kinda crazy to me,” said economist Scott Irwin of the University of Illinois on social media. “I call this ‘dirty dealing’ the U.S. farmer by not giving the full information on the payment rates.” Farmers who are prevented from planting due to rainy and wet weather this spring will not be eligible for the trade payments, he said.

Farm groups applauded the prospect of additional revenue. Trade war has compounded a slump in farm income by crimping ag exports, which provide more than 20¢ of each $1 in farm revenue. “We thank President Trump for recognizing that our patriot farmers have borne the brunt of China’s trade retaliation,” said president David Herring of the National Pork Producers Council.

Michigan Sen Debbie Stabenow, the senior Democrat on the Senate Agriculture Committee, questioned “whether this plan is fair or equitable.” California Rep Jim Costa said, “This rushed and poorly planned plan bailout raises the troubling possibility that some of the nation’s most valuable agricultural products, like the fruit and vegetable crops produced in central California, will receive a different and possibly reduced level of aid.”

Each segment of agriculture is treated separately. Field crops will see the “single payment rate” per count. Dairy producers will be paid on production history and hog farmers will be paid per animal. Tree nuts, fresh sweet cherries, cranberries, and fresh grapes will be compensated based on acreage in production this year.

Perdue said farmers would receive aid in three tranches, roughly in August, November, and next January. If the trade war is resolved, tranches may be canceled, he said. The USDA gave a similar warning in 2018 but made both rounds of payments.

Eligible for payment this year are plantings of alfalfa hay, barley, canola, corn, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, upland cotton, and wheat, said the USDA.

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