Since late May, soybean prices have dropped more than $2 per bushel as the trade war has escalated and tariffs have been implemented. Farm commodities across the board have been targeted and the farmers who produce those commodities are paying the price.
The President has vowed for weeks that he would “take care” of farmers, but agriculture groups did not know until today what that help would look like. The plan outlined today by the Trump Administration includes three components: direct payments to farmers to mitigate lower prices resulting from retaliatory tariffs, direct commodity purchases by USDA, and funding for a temporary program similar in purpose to the current Market Access Program (MAP) and Foreign Market Development (FMD) programs. The cost of the package is expected to total around $12 billion spread across multiple commodities, which is in line with the estimated $11 billion impact of the unjustified retaliatory tariffs on U.S. agricultural goods.
President Trump directed U.S. Secretary of Agriculture Sonny Perdue to craft a short-term relief strategy to protect agricultural producers while the Administration works on free, fair, and reciprocal trade deals to open more markets in the long run to help American farmers compete globally. These programs will assist agricultural producers to meet the costs of disrupted markets.
“This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy,” Secretary Perdue said. “The President promised to have the back of every American farmer and rancher, and he knows the importance of keeping our rural economy strong. Unfortunately, America’s hard-working agricultural producers have been treated unfairly by China’s illegal trading practices and have taken a disproportionate hit when it comes illegal retaliatory tariffs. USDA will not stand by while our hard-working agricultural producers bear the brunt of unfriendly tariffs enacted by foreign nations. The programs we are announcing today help ensure our nation’s agriculture continues to feed the world and innovate to meet the demand.”
Of the total unjustified retaliatory tariffs imposed on the United States, a disproportionate amount was targeted directly at American farmers. Trade damage from such retaliation has impacted a host of U.S. commodities, including field crops like soybeans and sorghum, livestock products like milk and pork, and many fruits, nuts, and other specialty crops. High tariffs disrupt normal marketing patterns, affecting prices and raising costs by forcing commodities to find new markets. Additionally, there is evidence that American goods shipped overseas are being slowed from reaching market by unusually strict or cumbersome entry procedures, which can affect the quality and marketability of perishable crops. This can boost marketing costs and discount our prices, and adversely affect our producers. USDA will use the following programs to assist farmers:
- The Market Facilitation Program, authorized under The Commodity Credit Corporation (CCC) Charter Act and administered by Farm Service Agency (FSA), will provide payments incrementally to producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs. This support will help farmers manage disrupted markets, deal with surplus commodities, and expand and develop new markets at home and abroad.
- Additionally, USDA will use CCC Charter Act and other authorities to implement a Food Purchase and Distribution Program through the Agricultural Marketing Service to purchase unexpected surplus of affected commodities such as fruits, nuts, rice, legumes, beef, pork and milk for distribution to food banks and other nutrition programs.
Finally, the CCC will use its Charter Act authority for a Trade Promotion Program administered by the Foreign Agriculture Service (FAS) in conjunction with the private sector to assist in developing new export markets for our farm products.
The National Pork Producers Council commends President Trump for taking steps to provide much-needed relief to American farmers in the crosshairs of global trade retaliation.
“President Trump has said he has the back of U.S. farmers and today demonstrated this commitment with an aid package to sustain American agriculture cutoff from critical export markets as his administration works to realign U.S. global trade policy,” said Jim Heimerl, a pork producer from Johnstown, Ohio and president of the National Pork Producers Council. “U.S. pork, which began the year in expansion mode to capitalize on unprecedented global demand, now faces punitive tariffs on 40% of its exports. The restrictions we face in critical markets such as Mexico and China — our top two export markets by volume last year — have placed American pig farmers and their families in dire financial straits. We thank the president for taking immediate action.
“While we recognize the complexities of resetting U.S. trade policy, we hope that U.S. pork will soon regain the chance to compete on a level playing field in markets around the globe. We have established valuable international trading relationships that have helped offset the U.S. trade deficit and fueled America’s rural economy.”
Ultimately, though, farmers simply want to sell their products for a fair price, free of trade wars.
“When Secretary Perdue and President Trump said they would be taking care of farmers if need be I knew that things with China weren’t going according to plan,” said Bret Davis, a Delaware County soybean farmer and a member of the American Soybean Association Governing Committee. “We don’t want to be taken care of. We want to have a free market. The way to solve this is for us to sell more soybeans to China, not less.”