Home News U.S. Rolls Out $16 billion Aid to Farmers Amid Trade War

U.S. Rolls Out $16 billion Aid to Farmers Amid Trade War


The government of the United States will provide $15 to $150 per acre financial aid to American farmers affected by the ongoing trade war with China. Officials said last Thursday that package would total to $16 billion, with farmers situated in the South will receive higher rates compared to ones located in the Midwest.

The assistance is poised to start in mid-August. This aid succeeds President Donald Trump’s package the previous year amounting to $12 billion that looked to decrease the prices of farm goods and make up for lost revenues.

U.S. Farmers, which majority are Trump’s supporters, have been one of the most affected by the extended trade conflict amongst the two biggest economies in the world. The exportation of soybeans, the U.S. most valuable product, to top client China plunged to its lowest in about 16 years last 2018.

Democrats aired their criticisms about the action, stating that what farmers need is fair trade and not a bailout. Sonny Perdue, U.S. Agriculture Secretary, said that the trade conflict unevenly hit farmers in the U.S. and that the new series of financial aid was justifiable.

The U.S. Department Agriculture stated that, in the new bailout, farmers would receive payment based on geographic location instead of by crop – a shift from the previous year.

Rob Johansson, Chief Economist in USDA, said in a conversation with reporters that there were an array of aspects they wanted to straighten up from the previous year’s program.

Based on an analysis made by Reuters sourced from payment rates available online, Missipi Delta farmers that grow cotton will be the biggest beneficiaries of the aid.

Average county payment rates are cheaper in the Midwest. The U.S. largest soybean producer Illinois is only at $69-per-acre county average and biggest hog- and corn-producing state Iowa only averages at $66. A happier story for Alabama as it has an average of $95 per acre, Mississippi at $87 and Louisiana at $70.

The package includes 29 commodity crops such as corn, wheat, soybean, upland cotton, and sorghum. Moreover, it covers hog and dairy farmers, and farms that cater to 10 specialty crops – consisting of walnuts, almonds, pistachios, sweet cherries, and cranberries.

Johanson stated that the rates were derived from an analysis of a ten-year trade data and the possible revenue nations with retaliatory taxes, such as India and China, may have imported.

Tim Bardole, a soybean and corn farmer in Iowa, said the aid is ample enough to create a difference and get them farming.

USDA said that for crops to be qualified for payments, they must be planted by August 1, 2019. The number of farm acres not suitable for planting reached a historic point this year due to the flooding woes in the Midwest area, officials stated. Thus, further slowing the farming sector.


Just a Band-Aid Solution

Even though the farm and industry sector accepted the aid, they are still pursuing the Federal Government to cease trade conflicts and settle deals with the highest export markets.

The Illinois Farm Bureau noted that those kinds of financial support from the administration is only a temporary fix. The National Cotton Council states that there has been significant deferrals and cancellations of cotton sales in the U.S. to China throughout the previous year.

Trade negotiations with the two powerhouse economies cracked last May after reaching a possible agreement and were only resumed the previous month in a meeting between Chinese President Xi Jinping and Trump.

Top negotiators from the U.S. and China will be personally meeting in the coming week, the first time since the talks broke down.

Potential massive agricultural purchases from China have been crucial for the possible deal though, Washington has aired complaints that Beijing has not committed to those fully. Perdue noted that of the 20 million tonnes of soybeans China has promised to buy, only 13.6 million tonnes had been obtained so far.

Sign-ups for the payments would start on Monday until December 6, USDA officials said. Auxiliary aids are slated in November and January depending if trade conflicts are still present and hitting the farming sector.

Payments are limited to $500,000 for each person or any legal entity.