Ag Industry Thrilled, Disheartened by Tariff Aid Details

August 27, 2018 05:19 PM
 
When USDA released details of their tariff aid package on Monday, some farmers were thrilled and some were really disappointed.

When USDA released details of their tariff aid package on Monday, some farmers were thrilled and some were really disappointed. Funds included in the Market Facilitation Program, which is the arm of the three-pronged program that results in direct payments, were not distributed equally, but instead the rates were based on tariff impact. Still, some agriculture organizations say the payments are off-base and won’t help farmers in need. 

“We welcome USDA’s announcement that soybean farmers will receive a payment on their 2018 production to partially offset the impact of China’s tariff on U.S. soybean imports,” said American Soybean Association President John Heisdorffer, a soybean producer from Keota, Iowa. “This will provide a real shot in the arm for our growers, who have seen soybean prices fall by about $2.00 per bushel, or 20 percent, since events leading to the current tariff war with China began impacting markets in June. This assistance will be particularly helpful to farmers who didn’t forward-contract their crop earlier this year and who need to arrange financing for planting next year’s crop.”

At $1.64 per bushel, soybean farms stand to receive the most money from tariff aid. Hog producers also stand to receive a hefty payment and are happy with the program, although they would prefer an end to trade disputes entirely. 

“True to his word that he would have our backs, President Trump today demonstrated his commitment to America’s farmers, including pork producers, by giving us some relief from the financial hit we’ve taken from retaliatory tariffs from some of our biggest trading partners,” said National Pork Producers Council President Jim Heimerl, a hog farmer from Johnstown, Ohio. “While we’re grateful and commend the administration for its action to help us. What pork producers really want is to export more pork, and that means ending these trade disputes soon.

Senator Pat Roberts (R-KS) who is the chair of the Senate Ag Committee, echoed those feelings in his statement on Monday. 

“I appreciate Secretary Perdue’s efforts to provide temporary relief to our hard-working farmers who are being affected by tariffs,”  Roberts said. “However, with low prices across the board, our farmers need long-term certainty. They want the predictability of export markets over aid. The announcement on a preliminary agreement with Mexico is a critical step in the right direction.”

Farm Bureau president Zippy Duval is happy with the program and says it will help thousands of farmers who are in a financial bind. 

“The administration’s tariff mitigation package is welcome relief from the battering our farmers and ranchers are taking in the ongoing trade war. There is no doubt that the tariffs from nations like China have led to lower crop and livestock prices,” Duvall said. “The additional burden of tariffs on the goods we sell to China, Canada, Mexico and the European Union has been more than many farmers can bear. Today’s aid announcement gives us some breathing room, but it will keep many of us going only a few months more. The real solution to this trade war is to take a tough stance at the negotiating table and quickly find a resolution with our trading partners. If we’re going to turn our farm economy around for the long-term, we need to open more export markets with fair trade deals, and the sooner, the better.”

Unlike soybean and hog farmers, those who produce corn, wheat, and dairy say the program leaves much to be desired.  

“In public remarks last week, USDA Secretary Perdue stated that the federal aid package for farmers being harmed by our current trade war with China won’t seem like it’s equitable. This was made clear today when the Administration introduced a proposal which poorly reflects the reality that all farmers are being harmed by tariffs,” said American Wheat Growers Association president and Sentinel, OK wheat farmer Jimmie Musick.  “NAWG appreciates the Administration’s steps to hold China accountable for unfair trade practices but tariffs and the subsequent self-inflicted need to provide aid aren’t the answer. Farmers across the country want ‘trade, not aid’, especially wheat growers. 

He says roughly half of all U.S. wheat is exported. As a result of the tariffs, China hasn’t purchased any wheat from the United States since March, Musick said. 

“Further, we estimate that the ongoing trade war will cause a 75¢/bushel price decrease and a reduction in global wheat production,” explained. 

Similarly, dairy producers were disappointed by the trade aid payment rates which will amount to approximately 12 cents per cwt.   

“Today’s announcement by the U.S. Department of Agriculture (USDA) on its tariff mitigation plan falls far short of addressing the losses dairy producers are experiencing due to trade retaliation resulting from the Trump Administration’s imposition of steel and aluminum tariffs,” said Jim Mulhern president and CEO of the National Milk Producers Federation. “The dairy-specific financial assistance package provided by USDA – centered on an estimated $127 million in direct payments – represents less than 10% of American dairy farmers’ losses caused by the retaliatory tariffs imposed by both Mexico and China.”

According to NMPF data, since the retaliatory tariffs were announced in late May, milk futures prices have lost over $1.2 billion through December 2018. In addition, milk prices for the balance of the year are now expected to be $1.10-per-hundredweight lower than were estimated just prior to the imposition of the tariffs on U.S. dairy exports.

“A new study by Informa Economics on the impact of the retaliatory dairy tariffs projects dairy farmer income will take a hit of $1.5 billion this year if the tariffs remain in place through the end of 2018,” Mulhern said in a statement on Monday. “Although there may be a second direct aid package at the end of the year, dairy producers are greatly disappointed that the farmer aid portion of today’s trade relief package does not adequately address the harm done to dairy.”

Likewise, corn farmers are upset with their payment rate of one cent per bushel. 

“National Corn Growers Association members had a spirited debate on the prospect of trade aid during last month’s Corn Congress meeting,” said NCGA President and North Dakota farmer Kevin Skunes. “While most members prefer trade over aid, they support relief if it helps some farmers provide assurances to their local bankers and get through another planting season. Unfortunately, this plan provides virtually no relief to corn farmers.”

According to an NCGA-commissioned analysis, which NCGA provided to USDA and the Office of Management and Budget (OMB), trade disputes are estimated to have lowered corn prices by 44 cents per bushel for crop produced in 2018. This amounts to $6.3 billion in lost value on the 81.8 million acres projected to be harvested in 2018.

The consistent message across sectors of the industry is trade, not aid. That’s a message we’ve heard time and time again over the past couple of months, and it doesn’t appear to be going away any time soon. 

“It’s important that the White House has recognized the difficult position farmers are in due to ongoing trade negotiations. This temporary relief from new tariffs will be welcomed by farmers in Iowa and throughout the country, but what they really want are long term markets, not handouts,” said Senator Chuck Grassley (R-IA).

Back to news


Comments

 
Spell Check

Glenn
St.Francisville, IL
8/28/2018 07:03 PM
 

  The $12 billion is really about $4.7 Billion. True to gov't smoke and mirrors, the $1.65 per bushel on soybeans is 82 1/2 cents. Notice that about 2/3 of the money is going elsewhere, not to the producers. Mr. Perdue needs to be championing producers, not ancillary interests. Net effect is we have lost our main market for soybeans. 35 years of market development down the drain to defend Silicon valley interests, who got their R&D funding from gov't defense dept. contracts. They then take intellectual property, paid for with taxpayer money to enrich themselves, and sell the technology to our competition. This system is broken. Big tech needs to have their incomes evaporate overnight. They have nothing at risk, and unlimited upside profit potential. Great work if you can get in the loop. I remember reading Eisenhowers speech warning about the "Military Industrial Complex". Now the mismanagement has trickled down to my farm. Sad day for American Agriculture.

 
 
jim
auburn, IL
8/28/2018 11:32 AM
 

  I must have miss something somewhere, the article says $1.65 per bu, not $.825 , for the first 50% of your production, the other 50% will come at the end of the year, if needed, I just sold part of my production for $8.40 + 1.65 = $10.05 cash , whats wrong with that ? take that x a good yield , I think that's a lot of help

 
 
Real World
Real World, SD
8/28/2018 07:42 AM
 

  To advertise this as a $1.65 for soybeans when really it is only $.825 for soybeans is a joke. Here in the upper Dakotas everything goes to the Pacific Northwest and the basis has widened that much alone not considering the futures. The President has access to $30 Billion, lets ask for it. I don't blame the President, I blame the ag groups for being cowards and bad negotiators along with the pathetic ag media. Farmers are the troops in the trade war, get us the supplies we need to fight another day. Also what has this got to do with conservation compliance? Our ag groups need to remove sod-swamp provisions in this and the next Farm Bill but we have the worse negotiators ever and they are cowards that looking out for the big corporations, not the the farmers!

 
 

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close