USDA Announces Details of $12 Billion Ag Assistance

This week, U.S. Secretary of Agriculture Sonny Perdue announced the details of the U.S. Department of Agriculture’s (USDA) previously announced $12 billion ag assistance plan, as reported on by our sister publication AndNowUKnow. Citing “trade damage from unjustified retaliation by foreign nations,” Secretary Perdue and the Trump administration detailed the specifics of “a short-term relief strategy to protect agricultural producers while the Administration works on free, fair, and reciprocal trade deals to open more markets in the long run to help American farmers compete globally.”

“Early on, the President instructed me, as Secretary of Agriculture, to make sure our farmers did not bear the brunt of unfair retaliatory tariffs,” noted Secretary Perdue, in a press release. “After careful analysis by our team at USDA, we have formulated our strategy to mitigate the trade damages sustained by our farmers. Our farmers work hard, and are the most productive in the world, and we aim to protect them.”

The Secretary outlined three programs designed to meet the needs of ag producers in disrupted markets. The three programs were outlined as follows:

• USDA’s Farm Service Agency (FSA) will administer the Market Facilitation Program (MFP) to provide payments to corn, cotton, dairy, hog, sorghum, soybean, and wheat producers starting September 4, 2018
• USDA’s Agricultural Marketing Service (AMS) will administer a Food Purchase and Distribution Program to purchase up to $1.2 billion in commodities unfairly targeted by unjustified retaliation. USDA’s Food and Nutrition Service (FNS) will distribute these commodities through nutrition assistance programs such as The Emergency Food Assistance Program (TEFAP) and child nutrition programs
• Through the Foreign Agricultural Service’s (FAS) Agricultural Trade Promotion Program (ATP), $200 million will be made available to develop foreign markets for U.S. agricultural products. The program will help U.S. agricultural exporters identify and access new markets and help mitigate the adverse effects of other countries’ restrictions

“Today’s announcement by the U.S. Department of Agriculture (USDA) on its tariff mitigation plan falls far short of addressing the losses dairy producers are experiencing due to trade retaliation resulting from the Trump Administration’s imposition of steel and aluminum tariffs,” said National Milk Producers Federation (NMPF) President and CEO Jim Mulhern, in a statement. “The dairy-specific financial assistance package provided by USDA – centered on an estimated $127 million in direct payments—represents less than 10 percent of American dairy farmers’ losses caused by the retaliatory tariffs imposed by both Mexico and China.”

As part of the USDA AMS’s Food Purchase and Distribution program, a number of meat and dairy categories were earmarked for up to tens of millions in commodity buyback, including $558,800,000 in pork, $14,800,000 in beef, and $84,900,000 in dairy goods. But despite this, the NMPF notes, the cost of trade losses incurred by dairy farmers and producers due to a slew of retaliatory tariffs leveed by the U.S. and China far exceeds the allotted funds.

“The price drop resulting from these tariffs has not been gradual—it’s hurting U.S. dairy producers right now and will continue to do so. Since the retaliatory tariffs were announced in late May, milk futures prices have lost over $1.2 billion through December 2018. Milk prices for the balance of the year are now expected to be $1.10-per-hundredweight lower than were estimated just prior to the imposition of the tariffs on U.S. dairy exports,” Mulhern continued. “In addition, a new study by Informa Economics on the impact of the retaliatory dairy tariffs projects dairy farmer income will take a hit of $1.5 billion this year if the tariffs remain in place through the end of 2018. This loss compounds to $16.6 billion if the tariffs are left in place long term over the next five years, through 2023. The impact of lost sales to China account for most of that harm, accounting for 73 percent of the total. That sizable decline in farmer incomes will compound the low prices and financial losses that dairies have already felt.”

Mulhern noted the particular vulnerability of dairy providers and expressed disappointment in the purchase programs inadequacy.

“Dairy farmers are particularly vulnerable to downward price swings because, unlike crop farmers who harvest once a season, dairy producers harvest and market their product daily. If farmer incomes continue to suffer as projected, we will lose more farms,” said Mulhern. “We appreciate that USDA has been seeking ways to help producers weather these volatile economic times. The product purchase program and the Trade Promotion Program are important elements of the overall package, and we will continue working with the department to best accomplish our shared goals of supporting dairy farmers’ prices in light of the harm caused by retaliatory tariffs. Although there may be a second direct aid package at the end of the year, dairy producers are greatly disappointed that the farmer aid portion of today’s trade relief package does not adequately address the harm done to dairy.”

To read more about the specifics of Secretary Perdue’s plan, read the USDA’s announcement in its entirety here. And to see the NMPF’s official statement on the USDA trade aid package, click here.

Deli Market News will continue to report with updates.