USDA officials have provided a broad overview of Trump administration efforts to lessen the negative impact of ongoing tariff wars on the nation’s agricultural producers. Details and implementation, however, aren’t expected until September.
During a conference call, July 24, USDA Secretary Sonny Perdue estimated tariffs imposed on U.S. agriculture as a result of the ongoing trade wars will have an $11 billion impact on U.S. agriculture. To offset those losses and relieve the financial stress faced by U.S. farmers, the USDA plan will authorize up to $12 billion for three programs:
• The Market Facilitation Program will provide incremental direct payments to producers of soybean, sorghum, wheat, corn, cotton, dairy and hog producers to help manage disruptive markets and deal with commodity surpluses, including marketing delays and increased storage costs, buying time to expand and develop new markets both home and abroad.
• The Food Purchase and Distribution Program will purchase surpluses of affected commodities, including fruits, nuts, rice, legumes, beef, pork and milk, for distribution through food banks and other nutrition programs.
• The Trade Promotion Program, administered by the USDA Foreign Agriculture Service in conjunction with the private sector, will assist in developing new export markets.
Perdue said the actions are “in response to the trade damage caused by the illegal, retaliatory tariffs imposed on the U.S in recent months. These programs are a firm statement that other nations cannot bully our agricultural producers to force the U.S. to cave in.
“This obviously is a short-term solution that will give President Trump enough time to work on a long-term trade policy and deals to benefit agriculture, as well as all sectors of the American economy,” Perdue said.
No congressional approval required
All three programs are already authorized under the Commodity Credit Corporation (CCC) and will be administered by USDA. They do not require additional congressional approval.
An implementation schedule will be rolled out over the coming weeks. The timetable outlined during the conference call reflects one previously suggested by Perdue, with a target date of around Labor Day. USDA is required to follow a formal administrative rule-making process, and then producers will be able to sign up at USDA Farm Service Agency (FSA) offices.
“We have some homework to do,” said Brad Karmen, USDA FSA assistant deputy administrator for farm programs. That homework will require filing registered documents, creating handbooks, software development and staff training.
Once the details are worked out, Karmen anticipates a simple sign-up process for crop producers, following the harvest of this year’s crops. Farmers would provide harvest totals for 2018, and those totals would be multiplied by a payment rate, presumable on a per-unit basis.
The USDA did not provide estimated financial outlays for specific commodities. How the funds are divided among the three programs was also not provided. The USDA officials noted the programs – especially food purchases and trade promotion activities – would take time to develop and roll out.
Although not yet specifically calculated, the USDA officials said the cost of the programs should come in under the $19.1 billion World Trade Organization ceiling for trade-distorting domestic support. Programs already in existence total about $5 billion.
NMPF pleased with general outline
While no details were provided specific to dairy producers, the head of the National Milk Producers Federation (NMPF) said the USDA plan addresses a multipronged approach requested by the organization: a combination of direct payments to farmers, milk product purchases for distribution to feeding programs and additional export development assistance.
“We appreciate the president following through on his pledge that America’s farmers won’t bear the brunt of the economic losses generated by the current trade conflicts,” said Jim Mulhern, president and CEO of NMPF. “Today’s announcement reflects requests that our organization has made of USDA to relieve some of the financial pain dairy farmers are feeling due to lost export opportunities.”
In a letter to Perdue on July 16, Mulhern said disrupted trade relations with major U.S. dairy customers have dashed any potential optimistic outlook for milk prices in the latter half of 2018.
NMPF’s economic estimates indicated that the decline in projected market prices since the imposition of tariffs by China and Mexico will result in a $1.65 per hundredweight decline in the U.S. average all-milk price during the second half of 2018. That would cost U.S. dairy farmers an estimated $1.8 billion through the remainder of this year.
While urging USDA to purchase dairy products for federal feeding programs, Mulhern said reliance on a dairy product purchase program alone would not be effective. NMPF requested the USDA develop a program to provide direct payments to dairy producers to compensate for the price declines resulting from the imposition of retaliatory tariffs. NMPF pledged to work with USDA staff to fashion a fair and equitable approach.
NMPF said it was also important for USDA to develop programs to help maintain existing dairy product sales to China and Mexico, including use of the CCC to fully compensate export sales to Mexico or China that are subject to any retaliation.
Concerned over a growing number of dairy farms closing, and many other dairy farmers questioning whether they could remain viable in a climate of worsening trade relations and continued declining prices, NMPF and more than 60 dairy companies and organizations urged the president to suspend the Section 232 tariffs on Mexico, while working to complete the North American Free Trade Agreement (NAFTA) negotiations.
Jeff Lyon, general manager of FarmFirst Dairy Cooperative, expressed similar sentiments. FarmFirst and other Midwest Dairy Coalition members had called for immediate attention regarding the economic conditions dairy farmers are facing.
“Exports of dairy products and ingredients have greatly benefited farmers over the past several years and are becoming a more significant part of the price they receive for their milk,” he said. “They must not bear the brunt of this trade war taking place.”
Lyon said FarmFirst will continue to advocate for meaningful trade negotiations that preserve market access. “More importantly, we will seek to suspend the retaliatory tariffs with major country exporters such as Mexico and China and restore the flow of dairy products between these trading partners,” he said.
In California, two decades of investment in developing export markets has left the state's industry more vulnerable than most to volatility in foreign markets, according to Anja Raudabaugh, CEO of Western United Dairymen (WUD).
“The combination of payments to help dairy producers manage cash flow, product purchase and donation to help keep inventories in check in light of reduced export demand and resources to help develop other export markets will be welcome news in our industry,” Raudabaugh said.
WUD staff will work with USDA “to quantify the economic damage inflicted on California's dairy farm families as a result of the reset of international trading relationships on products other than dairy," Raudabaugh said. “Our producers should be able to expect compensation to equal the harm they've suffered.” 
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Dave Natzke
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