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Cavalry en Route for U.S. Agricultural Producers

In an escalating trade war, it would appear the cavalry is en route for U.S. agricultural producers.

USDA will authorize up to $12 billion in programs designed to help U.S. agricultural producers contend with tariffs instituted by China on U.S. goods, according to a press release issued by the agency July 24. The $12 billion is in line with the estimated $11 billion impact of the Chinese tariffs, and is expected to help producers navigate disrupted markets.

Specifically, the program will include three aspects:

  • The Market Facilitation Program, authorized under The Commodity Credit Corporation (CCC) Charter Act and administered by Farm Service Agency, 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 in conjunction with the private sector to assist in developing new export markets for farm products.

“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,” USDA Secretary Sonny 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.”

Responses to aid were mixed. “While we’re grateful the administration is doing something, we’re hopeful these tariff issues will be resolved soon because farmers would rather trade than take aid,” said Joel Rotz, Pennsylvania Farm Bureau spokesman, reported TribLive (July 24). Many other agricultural professionals expressed a similar mixture of relief and worry regarding the tariff situation.

The announcement comes as the EU explores its own options. The EU indicated it is ready to launch tariffs on U.S. products worth $20 billion if the U.S. institutes a tariff program on European goods. The EU Trade Commissioner noted the tariffs would affect a variety of industries, including agriculture, reported Yakima Herald-Republic (July 25).

As always, stay tuned to the Food Institute for more information regarding the developing tariff situation.