Donald Trump follows through with US$4.9 billion aid package for American farmers hurt by trade war with China
- The USDA expects direct payments to farmers to total US$9.5 billion, with around US$7.3 billion for soybean farmers, the hardest hit from the trade war
- Farmers form part of the rural base that helped catapult Trump into the White House
The Trump administration said Monday it has approved a second round of payments in its bailout programme for farmers hurt by the ongoing trade war with China.
The Agriculture Department announced that it would spend billions more through 2019 on direct cash aid to producers of soybeans, cotton, corn and several other commodities.
The bulk of payments are slated for soybean farmers, after new government data showed a sharp decline in their exports to China.
This second round of payments is a portion of a broader farm bailout the Trump administration announced this summer, which the administration at the time said could spend up to US$12 billion to help farmers.
This summer, Agriculture Department officials said the first emergency aid package would consist of US$4.7 billion in direct payments to farmers, while this second round of payments would be US$4.9 billion, bringing total direct payments to US$9.6 billion.
As of November 18, USDA had paid more than US$1 billion to farmers in response to more than 240,000 applications for help.
“Today I am making good on my promise to defend our Farmers & Ranchers from unjustified trade retaliation by foreign nations,” US President Donald Trump said on Twitter.
“Our economy is stronger than ever – we stand with our Farmers!”
Today I am making good on my promise to defend our Farmers & Ranchers from unjustified trade retaliation by foreign nations. I have authorized Secretary Perdue to implement the 2nd round of Market Facilitation Payments. Our economy is stronger than ever–we stand with our Farmers!
— Donald J. Trump (@realDonaldTrump) December 17, 2018
The fate of the second round of bailout payments had been uncertain as Trump administration officials suggested it might not be necessary if trade tensions with China subsided.
Bloomberg reported earlier this month that China had resumed buying soybeans, following President Xi Jinping’s meeting with Trump at the Group of 20 nations.
But signs are mounting that the trade war has sharply reduced exports of some US commodities, and farming groups have criticised the bailout as insufficient to cover their losses.
New data released last week by the USDA showed a decline of about 97 per cent in soybean exports to China from the prior year, said Torsten Slok, chief international economist at Deutsche Bank Securities.
Critics have also accused the bailout of enriching large and foreign-owned firms, as well as being wasteful and inefficient.
(A Chinese-owned pork firm rescinded its contract under the bailout earlier this year amid criticism on Capitol Hill.)
The administration has billed the package as a short-term measure necessary to help farmers weather the trade war.
The three-pronged US $12 billion aid package pledged US $9.6 billion in direct cash payments to farmers, a US$1.2 billion programme to purchase farm goods and distribute them to food banks, and a US$200 million programme to promote exports in foreign markets.
About US$7.2 billion of the US$9.6 billion cleared by the administration will go to producers of soybeans, according to an Agriculture Department news release.
USDA officials said Monday they have already procured more than 4,500 truckloads of food through the direct purchase programme and have received applications from more than 70 applications for the trade promotion grants.