US government to pay US$4.7 billion directly to farmers in tariff aid

The US Department of Agriculture said on Monday its US$12 billion farm aid package would include US$4.7 billion in direct payments to farmers to help offset losses from retaliatory tariffs on American exports this season.

The bulk of the payments, US$3.6 billion, would be made to soybean farmers.

That amounts to US$1.65 per bushel multiplied by 50 per cent of production, Under Secretary for Farm Production and Conservation Bill Northey said on a conference call.

China has traditionally bought about 60 per cent of US soybean exports but has been largely out of the market since implementing tariffs on US imports in retaliation for the Trump administration’s tariffs on Chinese goods.

The aid package, originally announced in July, also includes payments for sorghum of 86 US cents per bushel multiplied by 50 per cent of production, 1 US cent per bushel of corn, 14 US cents per bushel of wheat, and 6 US cents per pound of cotton.

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Payments for hog farmers will be US$8 per pig multiplied by 50 per cent of August 1 production while for dairy farmers they are worth 12 US cents per hundred weight, Northey said.

Agriculture Secretary Sonny Perdue said the programme would begin on September 4, to coincide with the 2018 harvest. Farmers will need to present production evidence to collect payments and payments are capped at US$125,000 per person.

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A second round of payments may be evaluated depending on need.

The programme will also include US$1.2 billion in purchases of commodities, including pork and dairy products, to be spread out over several months, officials said.

Perdue said the programme will include some US$200 million for a trade promotion programme to develop new markets.

The package was seen as a temporary boost to farmers as the United States and China negotiate trade issues.

It has divided Republicans, some of whom favour free trade and were troubled by what they viewed as the kind of welfare programmes their party has traditionally opposed. It has also faced scepticism from some farmers, a key Trump constituency.