In the wake of retaliatory tariffs from China, the EU and Canada, the Trump Administration is monitoring the markets and is prepared to take action to shield farmers when appropriate.
The White House is looking at ways to use the Commodity Credit Corporation (CCC) to offer a financial backstop for farmers. That’s welcomed news as soybeans reach record lows and other commodities feel steep price declines.
The CCC, a division of USDA created in 1933, can borrow up to $30 billion from the Treasury Department and extend that money to farm groups, according to Jim Wiesemeyer, Pro Farmer’s policy analyst.
“If U.S. farmers see orders from China plummet because both countries create new layers of tariffs on imports, the White House previously said it wants to set up an assistance program for the U.S. ag sector, including the livestock industry, row crop producers and fruits and vegetable farmers impacted,” he said.
According to Agriculture Secretary Sonny Perdue, USDA analysts are tracking the impact tariffs are having on the markets on an ongoing basis.
“We’ve talked about this for several months now and the President’s commitment to make farmers bear the brunt of these trade disruptions,” he said last week, following a trip to Canada. “We’ll continue to do that, but it’s still too early to talk about the mechanisms or the quantification of that.”
According to Wiesemeyer, the White House is considering several options for using the CCC.
One options is for the CCC to purchase soybeans to buoy farmer revenues, he said.
“The CCC is able to assist through loans, purchases, payments and other operations,” Wiesemeyer said. “The CCC Act also authorizes the sale of agricultural commodities to other government agencies and to foreign governments and the donation of food to domestic, foreign, or international relief agencies.”
Another option is called Section 32. Congressional law lawmakers in the fiscal year 2018 March omnibus budget removed earlier restrictions on the CCC’s activities, he explained. “The change overturned years that had kept the CCC from supporting prices of agricultural goods,” Wiesemeyer said.
Earlier this year, President Trump gave USDA direction use all authority to protect farmers. Secretary Perdue said the first step is to determine impact.
“I think we've tried to make it clear that you can't demonstrate any damage on the day that the tariffs are announced,” he said last week. “And we're going to look at this very carefully. We have been calculating market impact on a weekly basis for a number of months now frankly, as a conversation progresses.”
So when will farmers start to see relief?
“When we can determine and if we determine there is legitimate and lasting market impact, based on market disruptions of tariffs and retaliation than we are we're prepared to take action,” Perdue said.