WASHINGTON — Producers who have raised soybeans, wheat, corn, sorghum, cotton, pork and dairy found out on Aug. 27 how much of the $12 billion trade compensation package they will receive. But many in agriculture would prefer a strong market to a government check.
"It's nice to get a little money, make a little cash flow happen," said Nancy Johnson, executive director of the North Dakota Soybean Growers Association. "Everybody is appreciative of a payment; everybody is kind of wishing the payments would go away."
Officials with the U.S. Department of Agriculture announced the initial breakdown of the $12 billion package, which includes programs for market facilitation, food purchase and distribution and agricultural trade promotion. The program is meant to help farmers get through current market conditions, in which the Trump administration's trade actions have resulted in retaliatory tariffs being placed on some agricultural products.
Soybean farmers will receive $3.6 billion of the $4.7 billion in the market facilitation program, with payments of $1.65 per bushel on 50 percent of production.
Johnson said losses in the market right now are about $3 per bushel, which means the payment won't come close to covering everything lost to the tariffs. Plus, the unknowns about the future of trade agreements and tariffs add to uncertainty, she said.
"It's going to be a very tricky thing for people to make plans," she said.
Other crops covered by the market facilitation program are wheat, which will pay 14 cents per bushel for a total of $119.2 million, sorghum at 86 cents per bushel for a total $156.8 million, corn at 1 cent per bushel for a total of $96 million, and cotton at 6 cents per pound for a total of $276.9 million. Pork producers will get $8 per head of pigs on hand as of Aug. 1, for a total of $290.3 million. Dairy producers will get 12 cents per hundredweight as determined through the Margin Protection Program formula, for a total of $127.4 million.
Producers on Sept. 4 will be able to begin taking in production amounts to their local USDA Service Centers. The program will pay 50 percent of production initially, with another payment possible later depending on market conditions.
Bill Northey, USDA undersecretary for farm production and conservation, explained the program will pay on actual production only, so producers who experience disasters will not get adjusted yields for the program.
Lisa Richardson, executive director of South Dakota Corn, said a completed farm bill, more bilateral trade agreements and access to markets matter more than the aid package to corn producers.
"At the end of the day, a penny a bushel is nothing," she said. "The thing that is concerning to the producers I talk to longterm is the demand destruction."
Richardson still expects farmers will file for their penny a bushel, since most corn growers will be at the Farm Service Agency to file for their soybean production anyway.
North Dakota, South Dakota and northern Minnesota, she said, are "captive" to infrastructure that sends their products to the Pacific Northwest. And with the difficulties in trade to China, farmers in those areas are particularly hurt by the current market. Basis, the difference between the futures market and cash prices at elevators, has been particularly high in the Dakotas, with soybean basis of well over $1.
In addition, Richardson said issues involving ethanol — that E15 hasn't been approved for year-round use and that the Environmental Protection Agency hasn't reallocated gallons of ethanol for which refiners received waivers under the Renewable Fuel Standard — also are negatively impacting corn growers in South Dakota.
"We have significant demand destruction taking place," she said.
Michelle Erickson-Jones, a Montana farmer and the president of the Montana Grain Growers Association, said she was pleased the administration had "some sort of package" to help farmers.
"Obviously, 14 cents is not going to make growers anywhere near whole," she said. "We just certainly would like to see some progress made on the trade front."
Winter wheat yields this year were "disappointing," given how much snow most of Montana had over the winter, but spring wheat yields have been good, she said. But the markets remain a source of frustration.
"Our financial estimates for the market losses (due to tariffs) came down at 75 cents per bushel," she said, noting that China hasn't purchased any Montana wheat since March.
Erickson-Jones hopes the trade package will give the Trump administration some leeway to negotiate with China to reach agreements and end the tariffs.
Agriculture Secretary Sonny Perdue said the trade compensation programs are necessary because farmers "cannot pay their bills with simple patriotism."
"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," Perdue said.
The other trade package programs
Greg Ibach, USDA undersecretary for marketing and regulatory programs, said the food purchase and distribution program will account for $1.2 billion in commodity purchases. The program will strive to help fill hunger needs in the U.S. and to not displace already-in-place programs. The USDA will be looking to purchase products that would have been bound for export markets, such as "extra fancy oranges" that were meant to go to China.
Ibach said pork, at $558.8 million, apples, at $93.4 million, and dairy, at $84.9 million, are the top targets for the purchase program, though numerous other commodities are also included.
Ted McKinney, USDA undersecretary for trade and foreign agricultural affairs, said the agricultural trade promotion portion of the program will receive $200 million to establish a cost-share assistance program. Some money may go to fixing or expanding existing trade relationships and other proposals may focus on finding new markets, he explained.