Farmer Aid Won't Cover Tariff Losses

'This payment isn't going to save anybody's life,' said Mike Paustian about aid offered by the USDA. Above, his farm in Walcott, Iowa.

The Trump administration has started compensating U.S. farmers for damage tariffs are doing to their business. Many farmers say the payments won't make up for lost sales to China and other foreign markets they were counting on to buy the huge amounts of crops and meat being produced across the Farm Belt.
 Bumper corn and soybean harvests and record pork production have pushed down prices for agricultural commodities. U.S. farm income is expected to drop 13% this year to $66 billion, according to the Department of Agriculture, extending a yearslong slump in the agricultural economy.
 The USDA in August said it would pay farmers nearly $5 billion to offset losses from global trade disputes. Major U.S. trade partners including China, Canada and Mexico have applied tariffs to billions of dollars' worth of U.S. agricultural exports in retaliation for tariffs imposed by Washington. The U.S. and China vowed last week to put more tariffs on each other's goods.
 The USDA said it has paid $35 million to farmers so far, especially in Iowa, Kansas, Illinois, Indiana and Wisconsin. Nearly 49,000 farmers have applied for the aid.
 Mike Paustian, an Iowa pork producer who sells some 30,000 pigs annually, expects to receive about $40,000. Depending on the size of his crops, Mr. Paustian said he could receive an additional $20,000 for his 1,400 acres of corn and soybeans. In recent years, a farm of that size could make some $4 million in annual sales on the livestock alone.
 Mr. Paustian said he appreciates what he sees as a goodwill gesture from the Trump administration. But he said he worries the trade fights will close doors to American pork and other farm goods while the world's appetite for meat is growing. “This payment isn't going to save anybody's life,” Mr. Paustian said. “It'll soften the blow a little bit.”
 Prices for lean hogs have fallen 19% since the end of May. Mike Haag, an Illinois hog farmer who raises roughly 17,000 pigs each year, estimates he is eligible for roughly $32,000 in aid, enough to pay for a few weeks of animal feed, he says. An additional $20,000 he expects to get for his corn and soybeans will cover a tractor payment.
 “I think most farmers are trying to support the president and what he's doing but it is painful,” Mr. Haag said. “There's a lot of extra pork out there.” Trade-related losses to the U.S. pork industry are expected to total more than $2 billion this year, said Iowa State University economist Dermot Hayes.
 The USDA has pledged direct payments of $290 million to pork producers to offset those losses. The agency has also promised to purchase $559 million worth of pork under a related program that farmers and economists say could boost prices in the pork market. USDA officials have said a second wave of payments to farmers could be announced in December if trade disruptions persist.
 The White House referred a request to comment to USDA, which has said the aid isn't intended to make farmers whole, but rather to provide shortterm relief while the Trump administration works to secure long-term trade deals that benefit the entire economy, including agriculture.
 U.S. dairy farmers will see their incomes slide $1.5 billion this year due to tariffs from China and Mexico, according to a forecast by Informa Economics. Milk prices are lower than production costs for many farmers, said Jim Briggs, who milks 60 Jersey cows in Wisconsin.
 Mr. Briggs said the $700 check he is expecting from the USDA will pay one month's electricity bill for his dairy barn. He is struggling to keep up with bills for feed and veterinary services.  


Pain Relief

The Trump administration is making payments to U.S. farmers to help soften the blow of damaging tariffs.

Notes: MFP rates are rounded. Multiplying the rate by the production may not equal the total payments.
*For pork and dairy the initial MFP rate is calculated by subtracting FPDP purchases from the estimated tariff damage.
Source: Agriculture Department



Add new comment