Aid plan for farmers hit by trade war said to be ready soon
President Donald Trump’s administration is preparing to announce another round of aid to farmers hurt by the trade war with China as soon as Thursday, people familiar with the plan said, a package of assistance that could exceed $15 billion.
The aid plan is largely modeled on the program the administration put in place last year after China slapped retaliatory tariffs on U.S. agricultural products, though the payments will be more generous.
The administration is considering payments of about $2 per bushel to soybean growers, 63 cents per bushel to wheat growers and 4 cents per bushel to corn growers to compensate for losses from the trade war, according to two people familiar with the payment levels, who asked not to be identified because the aid plan hasn’t been made public.
The administration last year paid $1.65 per bushel for soybeans, 14 cents per bushel for wheat and 1 cent per bushel for corn.
Other commodities also will receive payments in this year’s aid package, as they did last year, said the people, who didn’t provide the rates.
Soybeans for July delivery fell as much as 1.5% to $8.19 a bushel in the minutes after Bloomberg reported the payment rates under consideration, before ending 1.2% lower at $8.22.
Karl Setzer, market analyst at Agrivisor in Bloomington, Ill., said soybean futures dropped on “the knee-jerk reaction to possibly even more soybeans planted to take advantage of the subsidy.”
Sen. Joni Ernst, R-Iowa, predicted the payment levels would anger corn farmers, unless the administration raises
them.
“Corn farmers are going to be very upset about this,” Ernst said. “It’s better than the 1 cent per bushel that they got earlier but it’s not enough.”
Corn growers argued that they were shortchanged in last year’s $12 billion trade-assistance plan and campaigned for better treatment in the new round of aid.
The outlines of the plan still could change since Trump can make adjustments any time before it’s officially announced. The White House referred questions to the U.S. Department of Agriculture.
“Details on the new trade mitigation program will be forthcoming shortly, but we want to be clear that the program is being designed to avoid skewing planting decisions one way or another,” the USDA said in an emailed statement.
The standoff with China over trade is compounding the financial strain of five years of falling commodity prices and losses from spring flooding. American farm income dropped 16% last year to $63 billion, about half the level it was as recently as 2013. It’s directly hitting a key part of Trump’s political base: the rural voters he won by a wide margin in 2016 and who are crucial to his reelection campaign.
The current plans call for some direct purchase of food by the government, as Trump indicated when he first announced the new round of trade aid, but payments to farmers would be the main element of the assistance.
Agriculture Secretary Sonny Perdue said last week that the aid package could go as high as $20 billion, more than the $15 billion Trump announced earlier this month.
While the payments last year were based on farmers’ current production, the basis will be modified, the people familiar with the plan said. The administration is considering basing payments on the acreage farmers plant this year and their historic yield of crops per acre, the people said.
Former Agriculture Department officials and economists have warned that a decision to base payments on current acres planted risks skewing farm production decisions and adding to the rising stockpiles of crops, particularly soybeans. That risks depressing commodity prices even after the current trade dispute is resolved.
The combination of a disparity in payments favoring soybeans over corn and rainy weather in the Midwest could encourage farmers to change plans and decide to plant soybeans rather than corn. Soybeans have a shorter growing season, so they can be planted later.
Meanwhile, the White House and congressional Democrats have opened talks to resolve outstanding details that have thus far held up the new North American trade deal, according to people briefed on discussions between House Speaker Nancy Pelosi, D-Calif., and trade chief Robert Lighthizer.
Pelosi told Lighthizer that she will designate members of her caucus to be workinggroup representatives to deal with labor, enforcement, environment and pharmaceutical provisions of the deal, two people briefed on the discussions said. The groups will likely consist of Democrats from the Ways and Means Committee, the congressional Progressive Caucus and the Congressional Black Caucus to ensure they can build consensus within the party, one of the people said.
The Trump administration had hoped to build momentum last week by lifting steel and aluminum tariffs, clearing a major hurdle for lawmakers to approve the U.S.-Mexico-Canada Agreement. White House officials thought removing these duties would be enough to kick-start work on the deal in Congress this week, but after several recent meetings with Pelosi, Lighthizer and his team decided they would need more time to get Democrats on board, the people said.
While Pelosi previously said she wants to work with the administration to make the deal better for Democrats, this is the first time she has directed members of her party to sit down across the table from the U.S. trade representative and his team.