Trump and China are holding firm. Neither side has given an inch in the trade war, and it doesn’t appear that the dispute will end anytime soon. Announcements from the Trump administration yesterday made it clear that US farmers should not anticipate any form of financial relief in 2019. Instead, farmers should adapt to the markets, and plan their season accordingly.
Trade Aid for US Farmers
Ag Update reported a story from Mario Parker of Bloomberg News. Parker lays out the details of the aid package this year, and why it’s been necessary for US farmers.
As President Trump’s trade disputes with China escalated over the past year, US farmers- especially soybean farmers- have felt the effects. Some relief came in July, when the administration announced that farmers would be able to apply for compensation from the government to soften the hardship. That announcement was pretty good news for President Trump’s base, which includes many rural American farmers.
The entire aid package planned to be made available to farmers this year totals $12 billion. $4.7 billion of that aid package is currently being distributed.
US Agriculture Secretary Sonny Perdue spoke about the aid package with reporters and farmers yesterday in Champaign, Illinois. At that talk, he wouldn’t divulge any information about the second installment of funds for farmers, nor would he comment on how long he anticipated the trade war to last.
No Aid Coming in 2019
He did, however, talk about the administration’s plans for 2019. Farmers shouldn’t expect any trade-aid payments. Here’s why.
DTNPF’s Washington Insider broke this news yesterday. Perdue announced that payments to farmers as compensation for trade disputes were not planned for 2019. According to Perdue,
“Farmers are very resilient and adept at making their planning and marketing decisions based on the current market.”
US Farmers planted their crops and planned their season in 2018 before the trade war began. Nobody planned for a trade war in planting their crops, hence the current government compensation. Next year though, US farmers can plan ahead and plant their crops and plan their season according to market conditions.
“These facts are known now, unlike they were in 2018. So farmers, even under financial duress, will make their best business decisions for 2019 without the expectation of a market facilitation program.”
Farmers Will Adapt to Market Changes
Nicole Heslip of Brownfield Ag News shares a few more insights from Perdue in her article, “No 2019 Trade Payments.” In it, she states that Perdue anticipates that the market will equilibrate over time. That, paired with US efforts to develop new trade opportunities with Japan and the Philippines, should make 2019 trade aid payments to farmers unnecessary.
According to Perdue, farmers would rather just see the markets restored than receive aid payments from the government.
The administration seems to be sending a clear message on this. Don’t expect aid next year. Plan accordingly. Trump’s put in a lot of effort to hit the ‘reset’ button on Chinese trade. Now, the full-on trade war is hitting US farmers hard. Will Trump really just leave US farmers in the lurch and expect them to “adapt?”
With the Midterm election next week, the timing of this announcement is a little puzzling. Will Trump abandon a large part of his base by not helping US farmers in 2019? Or, could the administration’s current stance just be political play to more fiscally conservative constituents? Maybe it’s a last-ditch effort to bring them “home” prior to the election.
Share your thoughts on this question.
Read Ag Nook’s related article titled, “Will the US China Trade War Last Longer Than the Cold War?”