A farmer operates a combine harvester while harvesting hard red spring wheat near Winkler, Manitoba, Canada. (Photographer: Shannon VanRaes/Bloomberg)

American Farmers Set to Get $4.7 Billion in First Round of Aid

(Bloomberg) -- U.S. farmers will get $4.7 billion in a first round of direct government aid to compensate for market losses caused by retaliatory tariffs from China and other trading partners. The move was largely bemoaned by agriculture groups even as they welcomed the assistance.

Soybean growers, the hardest hit, will get $3.6 billion, according to the plan the government released Monday. Pork producers will receive the second-highest payments, totaling $290 million, and dairy farmers are also eligible for assistance, the U.S. Department of Agriculture said. The sorghum, corn, wheat and cotton industries will receive aid as well. Farm groups said the plan would aid producers even as they called for an end to the trade war.

"Today’s aid announcement gives us some breathing room, but it will keep many of us going only a few months more," said Zippy Duvall, president of the American Farm Bureau Federation in Washington, the biggest U.S. farmer group. "The real solution to this trade war is to take a tough stance at the negotiating table and quickly find a resolution with our trading partners."

Farmers are a key part of the rural political base that elected President Donald Trump, who has promised they will emerge better off from a trade war. Many agricultural producers are accepting that message. Still, an extended trade dispute that lingers into the fall harvest -- and the Nov. 6 congressional election -- holds the potential to shake that support.

Under Pressure

As soybean and other commodity prices have tumbled in the wake of the trade tensions, Trump has been under pressure from lawmakers representing rural districts to back away from tariffs. Those districts may play a key role in the November elections.

‘Phenomenal’ Soybean Crop Poses Problem for U.S. Farmers

Farmers can apply for aid starting Sept. 4, Agriculture Secretary Sonny Perdue said. That’s just as harvest season begins. Payments may start going out as soon as mid-September. The price-support funds don’t need congressional approval, as they are administered under USDA disaster procedures that date back to the Great Depression.

The USDA will spend an additional $200 million promoting agricultural exports as part of the aid. The government also will step up commodity purchases to help boost prices, making at least $1.2 billion of purchases, including $559 million of pork.

The Trump administration "will not stand by while farmers are targeted by countries who are acting in bad faith," Perdue said on a conference call.

The total size of the package, which the USDA estimated at $12 billion when it was announced last month, may be less than that should trade conditions change, said the agency’s chief economist, Rob Johannson.

Extra farm aid would help producers who are seeing prices drop and inventories rise because of disputes with China, Canada and other trade partners who are significant purchasers of U.S. pork, soybeans and other crops.

Still, many farm groups wished trade had never been disrupted in the first place, calling for an end to government interference in rural economies.

“While we’re grateful and commend the administration for its action to help us, what pork producers really want is to export more pork, and that means ending these trade disputes soon,” Jim Heimerl, president of the National Pork Producers Council, said in a statement.

©2018 Bloomberg L.P.