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Agricultural News

Oklahoma Agribusiness Association Considers Efficacy of Pres. Trump's Trade Aid Plan for Farmers

Wed, 25 Jul 2018 15:25:24 CDT

Oklahoma Agribusiness Association Considers Efficacy of Pres. Trump's Trade Aid Plan for Farmers The following analysis of President Trump's trade aid plan was authored by the Oklahoma Agribusiness Association and discusses how the funds will offset the financial burdens of farmers impacted by recent tariffs, part of the ongoing trade war between the US and China and though what means it is being implemented.

President Donald Trump’s trade war is hitting the U.S. ag sector at a time of multi-year downturns in commodity prices and farm income, and the administration today announced plans to provide $12 billion in aid to farmers to ease the pain. The size of the effort is in line with what USDA officials said was an $11-billion impact to agriculture from tariffs and the cost of disrupted markets resulting from those tariffs. Three programs will be deployed:

- Market Facilitation Program: Provides direct payments to producers of soybeans, sorghum, corn, wheat, cotton and dairy and hog producers.

- Food Purchase and Distribution Program: Focuses on purchases of fruits, nuts, rice, beef, pork and dairy for distribution to nutrition programs.

- Trade Promotion Program: Meant to assist in developing new programs to build new markets for U.S. commodities, with assistance from the private sector. It is not targeted to one specific commodity.

Officials are labeling the effort as a "one-time" action and say it will take some time to develop the needed rules and regulations for the efforts.

There will be a relatively simple signup - producers will need to tell USDA what their 2018 production is for the crops targeted. Producers will then get a payment based on that level of production multiplied by a yet-to-be-determined payment rate. USDA officials also said farmers will need to harvest their crops to receive payments.

Direct payments are expected to start going to producers in September and will be also dictated by when the producer actually harvests his or her crops. That would signal most wheat producers would be first up to receive the payments, along with pork and dairy producers.

The Trump Tariff Aid plan draws on the financial resources of a program known as the Commodity Credit Corporation (CCC) and Section 32 funding. The initiative does not authorize any new money and thus does not need approval from Congress. But U.S. taxpayers will see deficits go still higher.

The plan looks to have been pushed to be announced before Trump journeys to Iowa on Thursday, and to make sure payments and other assistance begins to be implemented before November elections, a conclusion that will likely be denied by Trump administration officials.

In truth, the move ups the odds that Trump and his aggressive trade policy officials will continue their escalation of tariff tit-for-tat around the world. The approach will cost American producers (and now taxpayers) billions of dollars and could inflict political pain on Republicans in farm states who now will have to address the president's trade policies and plans to temper their impacts.

No government program can make the ag industry whole, and as Senate Ag Chair Pat Roberts (R-Kan.) put it, “I think the agriculture community has made it clear, they much prefer trade rather than aid.”

There is a considerable amount of details to work through before implementation.



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