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Idaho agriculture could receive $15 million from USDA trade aid

By: Sean Ellis
Published in Blog on  August 31, 2018

By Sean Ellis

Idaho Farm Bureau Federation

POCATELLO – Idaho producers will receive an estimated $15 million from USDA’s trade mitigation package, which is designed to help farmers hurt by retaliatory tariffs that some nations have placed on U.S. agricultural products.

The U.S. Department of Agriculture in July announced a $12 billion plan to protect American farmers hurt by what it termed as unjustified retaliatory tariffs by some of the United States’ main trading partners.

Earlier this year, the Trump administration slapped tens of billions of dollars’ worth of tariffs on goods from some nations in response to what it claims are unfair trading practices. Those nations, including China, Canada, Mexico and the European Union, responded with their own tariffs, many of them focused on U.S. farm commodities.

USDA released details of the trade aid package on Aug. 27. That plan calls for distributing $4.7 billion worth of payments to producers of wheat, dairy, corn, soybeans, cotton, hogs and sorghum.

USDA’s Farm Service Agency will administer a Market Facilitation Program to provide these payments.

The agriculture department will also provide up to $1.2 billion to purchase unexpected surplus of commodities affected by the retaliatory tariffs. USDA’s Agricultural Marketing Service will administer this food purchase and distribution program.

Another $200 million will be used to assist the private sector in developing new export markets for farm products. This money will be made available through FSA’s Agricultural Trade Promotion Program.

The money will be distributed to the three programs beginning after Labor Day.

According to an American Farm Bureau Federation analysis of the USDA aid plan, U.S. soybean growers are due to receive a total of $3.6 billion, pork producers $290 million, cotton growers $277 million, sorghum growers $157 million, dairy producers $127,000, wheat growers $119 million and corn growers $96 million.

AFBF officials also estimated how much each state will receive from the aid package.

Idaho’s dairy producers are forecast to receive a total of $8.6 million and the state’s wheat growers should receive $6.3 million. Idaho corn growers are estimated to receive about $160,000 total.

Dairy and wheat rank No. 1 and No. 4 in Idaho in terms of total farm-gate receipts.

The response from Idaho producers due to receive some aid, and industry leaders who represent them, was lukewarm. They said the payments won’t come close to equaling the losses they have suffered because of the retaliatory tariffs.

Buhl dairyman John Brubaker said the tariffs have put a hurting on the state’s dairy industry and he estimates Idaho dairy operations are losing about $1 per cow per day because of them.

Dairymen will receive about 12 cents per hundredweight of production in aid and that doesn’t come close to making up for the harm caused by the tariffs, he said.

“I’m not for government handouts. I just want fair and free trade,” he said.

The average Idaho dairyman’s opinion of the aid package is that the amount being offered is insulting in light of the impact the tariffs are having on their operations, said Idaho Dairymen’s Association Executive Director Rick Naerebout.

“It’s not even coming close to covering the losses our dairymen are experiencing because of the tariffs,” he said.

Naerebout said U.S. dairy opeators have lost an estimated $1.5 billion this year as a result of the tariffs. The aid plan calls for paying dairy operations 12 cents per hundredweight on half of their production.

“It’s woefully inadequate compared to the damage done by the tariffs,” he said. “It doesn’t even come close to covering 10 percent of the losses suffered because of the tariffs. We have dairies going out of business because of this.”

Grace dairyman Sherman Toone, on the other hand, said he understands why President Donald Trump is playing hard ball with these nations: to try to get better trade deals that will end unfair trading practices and result in a level playing field that in the long run will benefit all Americans, including farmers.

“I’m willing to give the president a shot at this,” he said. “We might experience some hurt for awhile but I think this thing will straighten itself out in six months to a year.”

The president “is trying something different,” Toone said. “Nothing else has worked. Why not try something different? Let’s look at the big picture. If something good comes out of this long-term, that would be a wonderful thing.”

Idaho Grain Producers Association Executive Director Stacey Katseanes Satterlee said grain growers understand the president’s long-term strategy of playing hard ball with trading partners in order to secure better trade deals, but in the short-term, it’s always agriculture that loses in these types of trade wars.

She said grain growers appreciate the trade package’s acknowledgement “that wheat growers are being hurt by these retaliatory tariffs.”

The aid “is something and we’ll take it, but it does not amount to much to Idaho growers,” Satterlee said.

An analysis by U.S. Wheat Associates and the National Association of Wheat Growers estimates the tariffs have had a negative impact of 75 cents per bushel on U.S. wheat prices, which has caused $2.2 billion worth of losses across the U.S. wheat supply.

The aid package, Satterlee said, will offer 7 cents per bushel to wheat growers now and possibly 7 cents more later.

“The notion that the (aid) will somehow make up for those lost markets is not a correct notion,” she said.

Ririe wheat farmer Gordon Gallup estimated he will receive about $6,000 total from the aid package.

“We’ll take it; every penny helps,” he said. “But that doesn’t rescue anybody. It’s not close to being enough” to make up for the impact of the retaliatory tariffs.

According to AFBF, producers of commodities covered under the MFP payment program can submit applications for support on Sept. 4 or after harvest is complete and they can report their total 2018 production, whichever comes first.

Payments will be made in two parts, with the first payment guaranteed to occur. USDA will determine later whether trade conditions warrant a second payment period.

The first payment will be calculated by multiplying 50 percent of a producer’s 2018 production by the MFP rate.

An announcement about further payments will be made in coming months, if warranted, according to a USDA news release. If a second payment period is announced, the remaining 50 percent of a producer’s 2018 production would be subject to the second MFP payment rate.

USDA estimates it will distribute $4.7 billion in trade aid payments during the first round and that total would increase to $9.4 billion if there is a second round.

In a column, AFBF President Zippy Duvall said the USDA relief package “promises to give many farmers the extra help they need to hold on through ongoing trade disputes ... The package is not a fix-all, and we wouldn’t expect it to be. It will buy a little time, however, as the administration takes a tough stance at the negotiating table – and that’s a goal we can all get behind. Farmers and ranchers want to see fair trade deals hammered out and export opportunities expanded for American-grown products.”

In a news release, USDA said the trade aid package is a short-term relief strategy to protect ag producers “while the administration works on free, fair and reciprocal trade deals to open more markets in the long run to help American farmers complete globally.”

In the USDA news release, U.S. Secretary of Agriculture Sonny Perdue said the package was developed, after careful analysis, “to mitigate the trade damages sustained by our farmers.”

He said President Trump has been standing up to China and other nations, “sending the clear message that the United States will no longer tolerate their unfair trade practices, which include non-tariff trade barriers and the theft of intellectual property. In short, the president has taken action to benefit all sectors of the American economy – including agriculture – in the long run.”

“It’s important to note all of this could go away tomorrow, if China and the other nations simply correct their behavior,” Perdue said. “But in the meantime, the programs we are announcing … buy time for the president to strike long-lasting trade deals to benefit our entire economy.”

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