MIDWEST SCORES BIG
FIVE STATES GET BULK OF AID AS TRADE WAR SCRAMBLES CROP OUTLOOK.
The lion’s share of the projected $4.7 billion in President Trump’s tariff payments to crop and livestock farmers will cascade into the Midwest – between 60% and 75%, depending on how broadly the region is defined. There is simmering resentment over how the money is allocated. The USDA set a payment rate of $1.65 a bushel for soybeans but only 1¢ a bushel for corn and 14¢ for wheat.
“It is insulting that USDA’s plan sells corn farmers so short,” said Corn Growers president Kevin Skunes in an op-ed in a Capitol Hill newspaper. Wheat Growers president Jimmie Musick deplored the payments as inadequate and, like many farm group leaders, called for “trade, not aid.”
Soybean growers will see cash payments of $3.6 billion, hogs at $290 million, sorghum at $157 million, wheat at $119 million, and corn at $96 million under the aid plan announced by Agriculture Secretary Sonny Perdue just before Labor Day. The big soybean and hog states of Illinois, Iowa, Minnesota, Indiana, and Nebraska will garner nearly half of the money, even though payments are being prorated by 50%, says Farm Bureau economist Veronica Nigh.
“We always knew agriculture was going to be the tip of the spear” when a trade war began, said Agriculture Secretary Sonny Perdue in announcing the aid package, which he said allows time for President Trump’s policy of trade confrontation to pay off. USDA will decide by early December whether to make a second round of payments. The state of trade negotiations will be a major factor.
Nearly half of the farmers in a Purdue poll said the administration’s promise of a cushion against retaliatory tariffs did nothing to allay their fears of lower income this year. An additional 43% said the promise “somewhat” relieved their concerns. The poll was conducted after USDA said up to $12 billion was available for aid but before USDA announced the package of $4.7 billion in payments to producers, $1.2 billion in purchase of surplus foods, and $200 million to develop new overseas markets. In the Purdue poll, 71% of respondents said they expect lower income this year due to trade turmoil; most say the reduction will be less than 20%.
“Anxiety among farmers is completely understandable,” said a USDA spokesperson. “There’s no question they
would rather sell a good crop at a fair price, rather than receive a government payment.”
The trade war with China ended expectation of a neck-and-neck race for acres between soybeans and corn, says the University of Missouri think tank FAPRI. It projects soybean plantings to fall by nearly 6%, or 4.6 million acres, in 2019, while corn and wheat each gain roughly 2 million acres. Soybeans topped corn as the most widely planted crop this year, for the first time since 1983. FAPRI says corn area will top 92 million acres in most cases over the next five years, while soybeans never reach 86 million acres.
“China’s tariffs will reduce U.S. soybean exports,” says FAPRI, at the same time soy stocks balloon and market prices are the lowest in 12 years. Soybean exports would stagnate at current levels rather than growing in the near term.