The federal government’s announcement Thursday of a second phase of trade relief aid for farmers, totaling $16 billion, is good news, but they will have to wait a bit longer to find out exactly how they will be compensated.
The Trump administration made $12 billion available to farmers last year in an effort to reimburse them for losses incurred in the yearlong trade war with China. Unlike last year, however, farmers will have to wait for a while for program details.
“This announcement made it pretty apparent that we won’t see a trade deal for a while. The USDA wanted to be able to roll it out and tell us what it was like last time, but it’s not their fault, because they were forced to really scramble,” said Adam Nielsen, director of national legislation and policy development at Illinois Farm Bureau.
What is known is that the aid will come in three different forms, with most of it – about $14.5 billion – being administered through direct payments to farmers growing several commodities that include corn, soybeans and wheat. The payments will be based on a formula in which county rates will be multiplied by a farm’s total plantings. Eligible plantings can’t exceed what was planted the previous year.
Farmers will be waiting a while for the county rates, which will be set according to the assessed amount of trade damage inflicted by the trade war.
“The county rates aren’t coming until July, so that adds another layer to the unknowns farmers are dealing with in regard to the weather,” Nielsen said.
Three payments could be made – the first in late July or early August, and the others in November or early 2020. The second and third payments wouldn’t be made if a deal is reached before that time.
The protocol for dairy and swine producers will be unchanged from last year’s aid program. Dairy farmers will receive a per hundredweight payment on production history and hog producers will receive a payment based on hog and pig inventory covering a still unknown time period.
The second form of relief comes from the Food Purchase and Distribution Program. The government has targeted $1.4 billion for buying affected surplus commodities such as vegetables, fruits, beef, lamb, poultry and milk. Those products will then be distributed to food banks, schools and other conduits to low-income recipients.
The third tier of help comes in the form of $100 million dedicated to the Ag Trade Promotion Program, where it will be used to develop new export markets for U.S. farmers.
While farmers are thankful for trade relief 2.0, they find the lack of details a bit unsettling. They would much rather be out in the fields producing while the government is expanding their markets.
“Mostly I’m thinking thank goodness, but I’m concerned about how it’s going to play out,” Lee County farmer Larry Hummel said. “A little information is almost worse than none – now we can all worry until we get the rules locked in.”
The setting of the county rates are a particular area of concern for farmers.
“I have to think it’s nearly impossible for someone over there crunching numbers,” Hummel said. “I’m afraid they’ll just be grabbing numbers out of thin air.”
The uncertainties from the weather and the trade relief program make it tricky for many Illinois farmers who have fast-approaching insurance filing deadlines for not being able to plant their crops. The deadlines are June 5 for corn, and June 15 for soybeans.
With the weather, some people won’t even know what they’ll be able to get in the fields before those deadlines,” Nielsen said.
The rain and an expected rush into soybeans has lifted corn prices of late. July futures were up 15 cents, and September futures 14 cents, Friday afternoon.
In Illinois, only about 24% of the corn crop has been planted, compared with about 95% at the same time last year. For soybeans, only about 9% of the crop is in the ground, compared with about 79% at this time last year, according to the latest USDA statistics.
Illinois lawmakers weigh in on trade relief
U.S. Rep. Adam Kinzinger, R-Channahon
“The administration’s announcement [Thursday] regarding additional relief for our nation’s farmers will go a long way toward curbing the impacts of our trade issues with China. Farmers in the 16th District of Illinois and across the country are bearing the brunt of these tariff disputes on top of dealing with 6 straight years of industry recession.
"I know how hard our farmers work, and understand they’d prefer to have open export markets to sell their goods rather than look to relief programs. I respect that greatly and share those sentiments. But the president deserves to be commended – he is fighting for our farmers against unfair trade practices, but understands the need to provide temporary relief during these negotiations.
“As I have stated in the past, I agree with President Trump that the need to address unfair trading practices is long overdue, but the United States must keep the focus of our trade negotiations as narrow as possible to ensure the best overall outcomes for hard-working Americans. Congress now has an opportunity to finalize one set of negotiations by passing the U.S.-Mexico-Canada Agreement, which would allow the administration to focus on negotiating a trade agreement with China to make American businesses and farmers stronger than ever. I urge the Democratic leadership in Congress to put aside their political differences with the president and move swiftly to ratify the USMCA.”
U.S. Rep. Cheri Bustos, D-East Moline
“When I talk with farmers in Illinois, they don’t want a check from the government – they want markets to sell their goods. While I’m glad there is at least some effort to minimize the damage producers have felt from the president’s trade war, let’s be very clear – our farmers’ markets should have never been decimated in the first place.
“Going forward, I hope the White House will put politics aside and work with Congress to grow our agricultural economy – especially through stable trade policies, support for our biofuel producers and a bold investment in our nation’s infrastructure.”