U.S. Secretary of Agriculture Sonny Perdue today announced that the Trump Administration will provide up to US$16 billion in trade war relief programs to help farmers who have been impacted by the ongoing trade war with China.
The centerpiece is cash payments under the Market Facilitation Program (MFP) totaling US$14.5 billion to producers of a variety of crops as well as dairy and pork producers impacted by retaliatory tariffs.
Additionally, US$1.4 billion will be made available under the Food Purchase and Distribution Program (FPDP) of purchase surplus commodities affected by trade retaliation including fruits and vegetables for distribution by the Food and Nutrition Service (FNS) to food banks, schools, and other outlets serving low-income individuals.
U.S. tariff revenue collected by the Treasury would be used to support the program, according to the U.S. Department of Agriculture (USDA).
The move follows a major escalation in the trade war earlier this month when both countries raised tariffs on each other for a wide range of imports. Last year the U.S. Government provided a US$12 billion support package to help farmers offset losses from tariffs imposed by various countries.
“China hasn’t played by the rules”
The USDA says the US$16 billion support package is in line with the “estimated impacts of unjustified retaliatory tariffs on U.S. agricultural goods and other trade disruptions”.
“China hasn’t played by the rules for a long time and President Trump is standing up to them, 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,” Perdue said.
He said the package “ensures farmers do not bear the brunt of unfair retaliatory tariffs imposed by China and other trading partners”.
“Our team at USDA reflected on what worked well and gathered feedback on last year’s program to make this one even stronger and more effective for farmers,” he said.
The USDA says that further details regarding eligibility and payment rates will be released at a later date.
Aid package “insufficient to make the industry whole”
In response to the release of the trade assistance package, Western Growers president & CEO Tom Nassif issued the following statement:
“We appreciate the efforts of the Administration to again partially offset the damages being incurred by the agriculture industry as a result of the ongoing trade war with China. In particular, we are pleased that the direct payment options have been expanded to include both table grapes and the broader tree nut industry.
“However, we are disappointed that funding for the export promotion program was cut in half, to just $100 million, despite the fact that it was massively oversubscribed during the last round of trade assistance. As a silver lining, we see this situation as an opportunity to open up new markets for American agricultural products in other parts of the world.
“Regardless, it is important to acknowledge that the current trade aid package – as was the case with the last one – will be insufficient to make the industry whole. Indeed, it will take American farmers many years, if ever, to recover from the lost trade revenues and, more importantly, lost markets that have resulted from the continuation of trade disruptions with China.
“As I stated in response to the last trade mitigation plan, our farmers are competing in a global marketplace with rivals who are already taking advantage of the supply gaps left by these artificial trade barriers. We again urge the rapid and successful conclusion of our trade conflicts with China and the restoration of commerce between American family farms and buyers across the globe.”