U.S. Secretary of Agriculture Sonny Perdue announced $12 billion in aid Tuesday to farmers suffering the effects of trade retaliation as negotiations stall on international trade deals. But with details left to be finalized, how much help it will provide to producers remains murky.
Such a response illustrates that retaliatory tariffs are a major issue for producers and that something had to be done, said Mark Watne, president of the North Dakota Farmer's Union.
"But it's going to be pretty hard to make us whole when prices are down 15 to 20 percent," he said, estimating that historical disaster aid levels, while appreciated, would cover, at most, a quarter of the losses predicted.
Watne said nationwide estimates show farmers lost more than $13 billion last month alone due to trade disruptions.
The bulk of the focus will be on the Market Facilitation Program to provide direct payments to commodities, such as soybeans, corn, wheat, dairy and pork, produced in North Dakota, according to Rob Johannson, chief economist for the USDA. With soybeans being the largest sector affected, he said it will likely receive the most help.
“There’s a lot of money on the table, but what we really don’t know about is how it’s sliced and diced,” said Nancy Johnson, executive director of the North Dakota Soybean Growers Association. “Of course, we’d really like to be doing trade .... Certainly, we hope (trade agreements) get resolved but farmers will be grateful, if it’s not resolved, to receive some protection. Unfortunately, this is not a long-term solution.”
Funds also will go to the Food Purchase and Distribution Program, which buys surplus commodities, including beef, pork and dairy, and distributes it to food banks.
And finally, the Trade Promotion Program will be used to try to develop new markets for programs. All of this program funding will be provided through the Commodity Credit Corporation, which receives 30 percent of the tariff dollars collected by the United States.
Exact calculations for payments still need to be decided. USDA said it plans to have those details complete by the Labor Day goal stated earlier by Perdue.
"This is obviously a short-term solution to give the president time to work on long-term trade policy and deals," Perdue said on a conference call, and officials think the action will provide some hope to producers that the president and secretary have their backs.
Sen. John Hoeven, R-N.D., in response to critics calling the move a government bailout of farmers reiterated the temporary nature of the aid.
"What we want is access to markets, and that’s what the administration is trying to negotiate," he said. "Our trading partners have to understand we're serious about getting a result and, the sooner we get there, the better it is for everyone."
Sen. Heidi Heitkamp, D-N.D., said she thinks the solution would be to lift tariffs, ending retaliation on both sides, and go back to the negotiating table.
"No way does it calculate for the loss in agriculture," she said of the USDA proposed aid, adding that soybeans alone could use all of the funding to make up for losses.
As the trade war remains in place, Heitkamp said farmers and ranchers should be given certainty. She criticized the source of the USDA funding saying the "government is borrowing $12 billion" and, instead, proposed legislation to include producers affected by tariffs in a program for those whose jobs have been outsourced, funding that aid through the tariffs the U.S. has imposed.
The other issue is not all crops will receive this aid, Watne pointed out.
"We're also seeing where some of the specialty crops are dropping in value because the markets are not there," he said, offering lentils, which go to Asian countries, as an example. "The other prices are down, too — pulled down by soybeans."