Trump’s emergency 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$ 12 billion 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, aluminum and tens of billions of dollars in Chinese products.

USDA said it would use a Depressionera farm support fund to make direct payments to producers of soybeans, 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 program 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 Chinese- owned 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 program 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.”

But after the US economy grew 4.1 per cent in the second quarter, and the European Union agreed to a ceasefire in the trade confrontation with the US, Trump declared it a victory for his tough policies.

In announcing the aid for farmers, Perdue acknowledged that US farms were being hurt by what he called “illegal retaliation” to the tune of US$ 11 billion so far.

And EU officials downplayed Trump’s claim they had made a commitment to buy more US soybeans.

Meanwhile, analysts say that other industries caught up in the trade war may now expect relief from the government.

“Knowing this administration, they’ll design a bailout to help only massive agro-businesses who will use the money for stock buybacks,” said senior Democratic Senator Chuck Schumer said. — AFP