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With agreements in hand, fewer farmers expect trade war payments

Farmers are optimistic about the resumption of trade with China, and, as a result, fewer of them believe the Trump administration will send trade war payments to producers this year, said a Purdue University poll on Tuesday. Fewer than half of the producers contacted by the Ag Economy Barometer said they anticipated payments this year, compared to nearly six out of 10 last fall.

James Mintert, who oversees the monthly barometer, said producers have “a lot of positive expectations with regard to these trade agreements,” referring to the Phase One agreement with China and the USMCA between the United States, Canada, and Mexico. Three fourths of respondents said the agreements “completely” or “somewhat” relieved their concerns about the impact of tariffs on their farm income. Six out of 10 respondents said they expected that the soybean dispute with China would be resolved shortly.

Only 45% of producers said they expected payments through the stopgap Market Facilitation Program this year, while 55% said they did not anticipate payments. In last fall’s poll, 58% believed there would be payments on 2020 production and 32% did not. The administration has disbursed $23 billion in cash to farmers and ranchers to mitigate the impact of the trade war on U.S. agriculture in 2018 and 2019.

The Ag Economy Barometer survey was conducted from February 10-14, just before the Phase One agreement with China took effect and more than a week before President Trump said on social media that more payments were possible. “If our formally targeted farmers need additional aid until such time as the trade deals with China, Mexico, Canada, and others fully kick in, that aid will be provided by the federal government,” tweeted Trump on February 21, a day after the USDA forecast ag exports to China at just one third of the level for food, ag, and seafood trade set in the Sino-U.S. agreement.

The president’s remarks are likely to influence farmers’ sentiments going forward, said Purdue.

“I’m not sure that he’s made a final decision,” Iowa Senator Charles Grassley told reporters on Tuesday. He said Trump might have reservations about the coronavirus outbreak or about how quickly China would ramp up its purchases. Agriculture Secretary Sonny Perdue has advised farmers to plant for the market.

“Looking ahead, it remains to be seen how the ongoing spread of the COVID-19 virus and its impact on markets around the world will impact producers’ optimism about trade and future economic conditions in agriculture,” said a Purdue summary of the poll results.

All the same, the barometer stood at a reading of 168, up 1 point from last month and the highest since Purdue began the monthly reports in October 2015. The barometer is based on responses from 400 agricultural producers to a variety of questions about current conditions and expectations for the future. Producers have been confident throughout the trade war of a favorable result. In the latest survey, 80% said they expected that the trade war with China “will ultimately be resolved in a way that benefits U.S. agriculture.”

The Ag Economy Barometer is available here.

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