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Will Farmers Be Protected if There’s a Trade War?
When the White House went eye to eye with China and Xi Jinping over tariffs last month, the trade dispute may have quashed an oil industry attack on the RFS and prompted Congress to pick up the pace on the farm bill.
“It certainly starts the fire under every member of the committee,” says Senate Agriculture Chairman Pat Roberts, pointing to low farm income and the potential to lose vital farm exports due to high Chinese tariffs. “We are in a rough patch right now, is what we are in.”
President Trump vowed to make it up to farmers if they suffer Chinese retaliation and told Agriculture Secretary Sonny Perdue to write a plan to protect farmers and U.S. agricultural interests. At the same time, the White House quietly put the RFS dispute on the back burner, supposedly for more study. “I’m going to just come out and say it. The RIN price cap plan is dead,” says economist Scott Irwin of the University of Illinois.
When Trump took office, farm groups hoped to moderate his views on trade because exports generate 20% of farm income. Still, Trump pulled the U.S. out of TPP and began renegotiation of NAFTA before targeting China for tariffs on steel, aluminum, and high-tech products. Canada, Mexico, and China account for 40% of farm export sales. “This has to stop,” says Farm Bureau President Zippy Duvall when the threats of tit-for-tat tariffs reached $150 billion.
Some lawmakers were dubious whether the promise of USDA protection could be delivered equitably. Grain and soybean farmers already are shielded by crop subsidies and crop insurance, but livestock and specialty crops, also threatened by China, don’t have direct supports. Former USDA Chief Economist Joe Glauber says special U.S. compensation might spark WTO challenges of trade-distorting subsidies. Payments based on market-price declines are not well suited to a gradual and persistent dwindling of foreign demand. Some analysts said Chinese tariffs could bring larger soybean production among U.S. competitors, but others said China needs soybeans too much to shut off U.S. supplies.
“We don’t want another subsidy program. We need to sell our product,” says Roberts. The lead Democrat on the House Agriculture Committee, Collin Peterson, opposed “a one-time bailout” when a long-term solution is needed for farm income. “We ought to have a 10% increase in target prices in the PLC.”
This article was produced in collaboration with the Food & Environment Reporting Network, an independent, nonprofit news organization producing investigative reporting on food, agriculture, and environmental health.