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The $2 Billion Difference in Trump Trade Aid

The Trump administration has spent notably less than commonly described on its package to mitigate the impact of the trade war on 2018 agricultural production. This year’s version may come closer to the $16 billion maximum trumpeted by the president because of more accommodating payment rules.

While the administration said that “up to $12 billion in programs, which is in line with the estimated $11 billion impact of unjustified retaliatory tariffs,” was available for 2018 trade aid, outlays hover around $10 billion, with signup under way for the new round of assistance. Payments to farmers are $1 billion lower than expected.

A USDA spokesperson was not immediately available to discuss why payments through the Market Facilitation Program were smaller than the $9.6 billion the USDA estimated last December, when it released the second and final round of money.

To date, $8.6 billion has been paid on 1.03 million applications from producers, said the USDA. It also spent $1.2 billion to purchase and then give away foods, such as pork, apples, and peanut butter, affected by the Sino-U.S. trade war and it provided $200 million in cost-share funds to develop overseas markets. Those outlays total $10 billion unofficially.

“We’ve assumed that payment rules and payment limitations would result in a lower level of payments,” said Pat Westhoff, director of the FAPRI think tank. “Our April baseline reported a guesstimate of $8.855 billion, which appears to be in the ballpark of what has actually been paid.” Westhoff said that “at least a few people just never signed up.”

For 2018 production, farmers and ranchers were allowed payments of up to $375,000 apiece, with limits of $125,000 each for row crops, specialty crops, and hogs and dairy. Producers with an adjusted gross income (AGI) higher than $900,000 were ineligible. Congress changed the AGI rule in the disaster bill enacted in June so that operators with an AGI of more than $900,000 are eligible for payments if three fourths of their income is from farming and ranching.

This year, producers are allowed up to $500,000 each, and the wealthiest operators — those with AGIs higher than $900,000 — will be eligible for payments if three fourths of their income is from farming and ranching.

USDA payment limits are usually doubled for a married couple because spouses are automatically eligible for subsidies.

Enrollment opened a week ago for this year’s Market Facilitation Program, and will run through December 6, with up to $7.25 billion available. That’s half of the $14.5 billion that could be paid, according to the USDA. Some $1.4 billion will be spent on food donations. The USDA has already awarded $100 million in export promotion funding.

Payments are expected in mid- to late August and will be based on a farmer’s plantings of two dozen eligible crops this year. This month’s payments will be half of a producer’s calculated payment or a minimum of $15 an acre. Payment rates per county range from $15 to $150 an acre, with the highest rates in cotton territory.

Additional payments may be made in November and January, as warranted by market conditions and trade developments, said the USDA.

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