Trump’s aid to farmers could have negative side effects

NEW YORK: For US farmers affected by the trade war unleashed by President Donald Trump, the US$12bil (RM48.7bil) in emergency aid from his administration’s is a temporary remedy, and it comes with several potential negative side effects.

The Agriculture Department announced the aid on Tuesday to help farm producers hurt by retaliation by major trading partners against US tariffs on steel, aluminium and tens of billions of dollars in Chinese products.

USDA said it would use a Depression-era farm support fund to make direct payments to producers of soy beans, sorghum, corn, wheat, cotton, dairy and hogs.

It also intends to purchase excess production of commodities such as fruits, nuts, rice, legumes, beef, pork and milk for distribution to food banks and other nutrition programmes.

The size of the aid programme is “unprecedented,” said Joseph Glauber, a former USDA economist now at the International Food Policy Research Institute.

But its effectiveness will be limited, he said, and it creates a “moral hazard”.

And ironically, depending on the criteria used, some of the benefits could go to Chineseowned companies.

“The pork industry is dominated by very large corporations,” said Chris Hurt, agricultural economist at Purdue University, in Indiana.

“The largest hog producer in the US, Smithfield, is owned by a Chinese company.”

Agriculture Secretary Sonny Perdue said the new aid will not need congressional approval, but the programme drew sharp criticism from many legislators, including Republicans.

National Farmers Union President Roger Johnson said crop prices are falling and farmers’ “livelihoods are on the line with every tweet, threat or tariff action that comes from the White House”.

Republican Senator Ben Sasse, a frequent Trump critic, said in a statement: “This administration’s tariffs and bailouts aren’t going to make America great again, they’re just going to make it 1929 again.”