Washington Insider: Farm Aid Payments Planned as Harvest Begins

Well, nobody is much surprised to see that the administration is moving quickly to provide aid to farmers to compensate for negative effects of the administration's China trade fight. Bloomberg reported this week that that sign-up for payments has begun and that there have been 59,275 applications as of this week.It notes that the top 5 states where farmers have applied for aid are Iowa, Kansas, Illinois, Indiana, and Wisconsin, and that the top 5 commodities where farmers are seeking assistance are wheat, dairy, hogs, corn, and soybeans. USDA says farmers will get $4.7 billion in a "first round of direct government aid" to compensate for market losses caused by retaliatory tariffs from China and other trading partners.Also, nobody was surprised by the complex reaction among farmers, who Bloomberg says "largely bemoan" the need for the program "even as they welcome the assistance."Soybean growers, the hardest hit by retaliatory tariffs, will get $3.6 billion in this round, according to the plan the government released Monday. Pork producers will receive the second-highest payments, totaling $290 million. Others who will receive aid include dairy farmers as well as producers of sorghum, corn, wheat and cotton.An example of the reaction by producers to the program came from the American Farm Bureau Federation (AFBF), the largest farm group. It said, "Today's aid announcement gives us some breathing room, but it will keep many of us going only a few months more," according to Zippy Duvall, AFBF president. He also noted that "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."Farmers are a key part of the rural political base that elected President Donald Trump, who has promised they will emerge better off from a trade war — and many agricultural producers are accepting that message, Bloomberg said. Results of the latest DTN/The Progressive Farmer Agriculture Confidence Index and the recent Progressive Farmer Magazine 2018 Zogby poll, reported elsewhere, back up that overall satisfaction.Still, an extended trade dispute that lingers into the fall harvest — and the Nov. 6 congressional election, is thought to hold the potential to shake that support.As soybean and other commodity prices have tumbled in the wake of the trade tensions, Trump has been under pressure from lawmakers representing rural districts to back away from tariffs. Those districts may play a key role in the November elections.USDA Secretary Sonny Perdue said the payments don't need new congressional approval, as they will be administered under USDA "disaster procedures" from the Depression of the 1930s.The USDA will spend an additional $200 million promoting agricultural exports as part of the aid. The government also will step up commodity purchases to help boost prices, making at least $1.2 billion of purchases, including $559 million of pork.The Trump administration "will not stand by while farmers are targeted by countries who are acting in bad faith," Perdue told the press recently.The total size of the package, which the USDA estimated at $12 billion when it was announced last month, may be less than that should trade conditions change, said the agency's chief economist, Rob Johannson.Bloomberg also cites the National Pork Producers Council President, Jim Heimerl, who said, "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."So, we will see. Export markets are extremely important to producers because they are growing. In many developing countries consumers are becoming more affluent, while most domestic food markets are already well supplied and much more stagnant. Traditionally, producers have been "unforgiving" toward politicians who interfere with their access to export markets, so their reactions is being watched very closely this fall, even as the newly-agreed, three-nation NAFTA is considered, and the U.S.-China fight continues—policies producers should watch closely as they intensify, Washington believes.