US to pay farmers up to US$16 billion for trade war losses

The US government will pay American farmers hurt by the trade war with China between US$15 and US$150 per acre in an aid package totaling US$16 billion, Reuters reports

The assistance, starting in August, follows Republican President Donald Trump’s US$12 billion package last year that was aimed at making up for lower farm good prices and lost sales.

US farmers, a key Trump constituency, have been among the hardest hit in the year-long trade war between the world’s two largest economies. Shipments of soybeans, the most valuable US farm export, to top buyer China sank to a 16-year low in 2018.

Democrats criticized the move, saying farmers needed fair trade instead of a bailout. Agriculture Secretary Sonny Perdue argued that US farmers were disproportionately hurt by the trade dispute and that the new round of aid was justified.

“President Trump has a great affection for America’s farmers and ranchers and it’s pretty evident in this program,” Perdue said. “He knows that they are fighting the fight and they are on the front line.”

In the new aid package, the US Department of Agriculture said it would pay farmers according to geographic location rather than by crop – a change from last year.

“There were a number of factors from last year’s programs that we wanted to correct,” USDA chief economist Rob Johansson said in a call with reporters.

Farmers in the cotton-growing Mississippi Delta states stand to be the greatest beneficiaries of the program, according to a Reuters analysis of the payment rates posted online.

The average county payment rate is about US$95 per acre in Alabama, US$87 in Mississippi and US$70 in Louisiana. Payment rates were lower in the Midwest, with a US$69-per-acre county average in Illinois, the country’s top soybean producer, and a US$66 average in Iowa, the top corn- and hog-producing state.

The program covers 29 commodity crops, including soybeans, corn, wheat, sorghum and upland cotton. It also covers dairy and hog farmers, as well as farms that grow 10 specialty crops – including almonds, pistachios, walnuts, cranberries and fresh sweet cherries.

Johansson said the minimum and maximum payment rates were based on an analysis of 10 years of trade data and the amount countries with retaliatory tariffs, including China and India, could have imported.

“These payments are enough to make a difference, kind of get us to the harvest,” said Tim Bardole, an Iowa corn and soybean farmer.

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