Pile of Trade War Buttons With US Flag, 3d illustration cbies/ThinkstockPhotos

Sec. Perdue promises more trade aid

Jockeying well underway as farmers look for more to help make up for trade war’s impact on markets.

 

USDA has already allowed for nearly half of its $12 billion in aid to be directed to farmers, with soybean producers getting the bulk of those funds. The agency had said it would make an announcement on whether additional aid was needed by December.

In recent comments, Secretary of Agriculture Sonny Perdue confirmed that USDA will be issuing additional payments. There was some hope that USMCA would offer a market pop, although that wasn’t the case.

Now the jockeying game again gets underway as groups vie for a bigger piece of the pie. The National Milk Producers Federation said they need more to make-up for their dramatic losses. Milk producers have experienced more than $1 billion in lost income since May, while the first round of USDA trade mitigation payments allocated only $127 million to dairy farmers.

Corn farmers also want more than the 1 cent/bu., and soybean farmers, especially in the Upper Midwest, want the formula to take into account the devastating impact of negative basis on growers. Canola was not initially included in the payment list, but with an over $2 drop in its prices also is seeking aid. 

NMPF analyzed the CME dairy futures-based milk prices through the end of 2018, based on the settlement prices in late May, just before retaliatory tariffs were announced, with those same prices after tariffs had been thoroughly incorporated into market expectations. The expected impact of the retaliation may result in roughly $1.5 billion in lost revenue for producers during the second half of 2018.

USDA’s own monthly "World Agricultural Supply & Demand Estimates" (WASDE) showed a drop of 70 cents/cwt. in its milk price forecast for the full 2018 calendar year, after the imposition of the tariffs. The WASDE figure amounts to a loss in dairy farm income of $1.5 billion for the year.

NMPF reported that an Informa Agribusiness Consulting study estimated that the tariffs would lower U.S. dairy farm income by $1.5 billion for all of 2018. The Center for North American Studies at Texas A&M University estimated an annual loss of $1.17 billion.

“These estimates show that farmer losses from the tariffs will notably exceed $1 billion in 2018,” NMPF chairman and dairy farmer Randy Mooney wrote in the letter to USDA, adding that “significant income losses will continue” if tariffs imposed by Mexico and China – two of the largest dairy export markets for the U.S. – remain in place.

Earlier this fall, Sen. Heidi Heitkamp, D-N.D., urged Perdue to improve the aid package offered to farmers. She outlined concerns to Perdue that support for soybean farmers is inadequate because it doesn’t take into account the increase in basis – the cost of getting a crop to market – that farmers have faced as a result of the trade war. Basis varies by region, and North Dakota farmers have seen their basis increase more than farmers in other regions. Heitkamp urged Perdue to consider regional variations in price and the widening basis for soybean farmers when calculating how much assistance to provide.

While canola has not yet been hit with retaliatory tariffs, the price of canola is closely tied to the price of soybeans, and Heitkamp urged Perdue to make canola an eligible commodity for assistance due to the depressed prices farmers are facing.

Heitkamp also expressed concerns that corn growers will be inadequately compensated for their losses. The farmer aid package proposes to compensate corn growers at 1 cent/bu., much less that the decrease in the price for a bushel of corn since June 1.

“There’s no such thing as short-term pain for farmers in a trade war, and new predictions for 2019 are very worrying for our ag economy and the communities that depend on this vital industry,” Heitkamp said. “North Dakota farmers spent decades building a market for soybeans in China, and they’re seeing it evaporate before their eyes because of the Administration’s shortsighted trade policies. We can’t be silent in the face of this self-inflicted wound to North Dakota’s largest industries, and I’ll keep fighting smart trade policies that protect workers and expand markets for the goods we proudly grow and produce for the world.”

 

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