The Trump administration pledged to pay farmers $4.7 billion to offset losses from trade disputes with foreign buyers of U.S. agricultural products.
Agriculture Secretary Sonny Perdue said the payments would help protect farmers from “unjustified tariffs” some nations have applied in response to President Trump’s trade policies. China, Mexico, the European Union and other trade partners have levied tariffs on U.S. farm goods from soybeans to pork to apples, leaving growers vulnerable during a downturn in the agricultural economy.
Farmers have been awaiting the details of the up to $12 billion in aid the U.S. Department of Agriculture promised to provide them in July.
Mr. Perdue said the payments would soften the blow to farmers while the Trump administration negotiates deals that benefit the U.S. economy overall, including agriculture. Farmers, he said, “cannot pay their bills with simple patriotism.”
Some farm groups said the spending won’t make up for losses from the trade clashes.
The National Corn Growers Association estimated lower prices as a result of tariffs will cost growers more than $6 billion this year. The direct payment program allocated $96 million for corn growers.
“This plan provides virtually no relief to corn farmers,” said Kevin Skunes, the association’s president and a North Dakota farmer.
Soybean farmers are in line to get roughly three-fourths of the direct payments, or $3.6 billion, followed by producers of pork, cotton, sorghum, dairy and wheat.
Pork products will benefit the most from a second form of assistance, which will buy up excess commodities—$558 million out of an estimated $1.2 billion. The USDA will also purchase roughly $90 million each of apples, dairy products and pistachios among the more than two dozen products targeted.
USDA officials said they could decide by December to make a second wave of direct payments to farmers if damages from trade penalties persist.
Soybean futures prices have fallen 18% since the end of May to a decade low as tariffs took effect in China, the largest customer for that crop. Corn prices have dropped 12% and wheat has declined 5%. Lean hog futures have tumbled 29% as China and Mexico, big buyers of U.S. pork, levied duties on those products.
The USDA said the additional purchases will focus on high-value crops meant for export, separate from purchases the government makes to stock school-lunch and other nutrition programs.
“Instead of just oranges we will be buying extra fancy oranges” typically destined for China, said Greg Ibach, undersecretary for marketing and regulatory programs.
USDA said it would also make available $200 million for programs focused on overseas markets for U.S. agricultural products. The USDA said it would begin implementing the plan by Sept. 4, with payments to pork, dairy and wheat producers potentially en route to farmers as early as mid-September.
USDA’s “tariff mitigation plan falls far short of addressing the losses dairy producers are experiencing,” said Jim Mulhern, chief executive of the National Milk Producers Federation. The group estimated the $127 million allotted to dairy represented less than 10% of what producers have lost during recent trade disputes.
Some lawmakers also are skeptical the aid announced by USDA will significantly improve conditions for farmers.
“No farmer is going to come close to being made whole by anything that USDA has proposed as a response to the decrease in price due to trade restrictions,” said Sen. Roy Blunt (R., Mo.). “Farmers have to hope that the government continues to work to open more markets.”
The planned payments for excess foodstuffs could set up jockeying between some producers. A call for new vendors for the federal commodity-purchasing program attracted 350 suppliers last week, officials said.
Producers of goods left off the list of direct payments are also likely to continue to press for compensation. USDA officials said they picked producers of commodities hit the hardest so far.
Details of the aid package came hours after President Trump announced an agreement with Mexico to revamp the North American Free Trade Agreement, which has boosted exports for many U.S. farmers. Mr. Trump said it remains to be seen whether Canada, the other Nafta signatory, would join a newly negotiated pact.
Many farmers fear tariffs on U.S. agricultural goods will allow foreign rivals to undercut U.S. prices well into the future and snatch export business established over decades.
Ron Moore, an Illinois farmer and chairman of the American Soybean Association, said he made multiple trips to Washington over the summer to press for progress on trade disputes and new markets for U.S. crops. Also on his wish list: increased funding for trade programs in the farm bill, the multiyear legislation that is due for reauthorization this year to fund agriculture and nutrition programs.
“The short-, medium- and long-term solutions to tariffs are critically important so we don’t have a repeat of the ’80s,” said Mr. Moore, referring to a devastating downturn that forced many farmers and lenders out of business 30 years ago. “We’re right at the cusp of a crisis,” he said.
Source: The Wall Street Journal