US plans more aid for farmers amid China trade spat

[CHICAGO, Washington] U.S. Agriculture Secretary Sonny Perdue said on Friday that President Donald Trump had asked him to create a plan to help American farmers cope with the heavy impact of the US-China trade war on agriculture.

A new aid program would be the second round of assistance for farmers, after the Department of Agriculture's US$12 billion plan last year to compensate for lower prices for farm goods and lost sales stemming from trade disputes with China and other nations.

"While China may backtrack, @POTUS is steadfast in his support for US farmers and directed @USDA to work on a plan quickly," Perdue said on Twitter on Friday.

The latest round of trade talks between Washington and Beijing ended on Friday after 90 minutes, the same day increased tariffs on Chinese goods went into effect. Mr Trump said talks would continue but there was "no rush" to reach a deal.

The toll on US agriculture has been heavy, in a sector that has largely been supportive of Mr Trump. Soya beans are the most valuable US farm export, and shipments to China dropped to a 16-year low in 2018, while soya bean futures prices fell this week to 11-year lows - and once again closed down on Friday.

"I think he's finally realised that the Chinese tariffs have put a real strain on the countryside, and that if more tariffs are put on, the strain is going to get even worse," said Tom Vilsack, who was USDA secretary under Democratic then-President Barack Obama.

A USDA spokeswoman declined to give further details on the plan.

The American Farm Bureau Federation said it was too soon to throw its support behind the potential program, as did the American Soybean Association. But US hog farmers were quick to support the idea of additional government purchases.

"It is fair and right that the US government purchase significant quantities of pork over the next 18 months to ship as food aid to help ease the financial burden placed on producers," said David Herring, a pork producer from Lillington, North Carolina, and president of the National Pork Producers Council.

Mr Trump on Twitter erroneously wrote that China would pay the tariffs. However, it is the importer - usually US companies or the US -registered units of foreign companies - that shoulder the costs.

"With the over 100 billion dollars in tariffs that we take in, we will buy agricultural products from our great farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance," Mr Trump wrote on Twitter.

However, any funds from US tariffs go into the U.S. Treasury's general fund, and Congress - not the White House - directs US spending.

"I don't think he understands that he's not a dictator," said Mr Vilsack, who is now chief executive of the U.S. Dairy Export Council industry group. "He can't just order this to happen."

U.S. Customs and Border Protection collects the tax on imports. The agency typically requires importers to pay duties within 10 days of their shipments clearing customs.

Until this week, the White House's budget plans had called for a dramatic, 15 per cent cut for USDA, calling its subsidies to farmers "overly generous."

The White House previously used Commodity Credit Corporation (CCC) funds to offset farm income losses in trade disputes. The CCC is a branch of the USDA that has broad authority to make loans and direct payments to US growers when prices for corn, soya beans, wheat and other agricultural goods are low.

POSSIBILITIES FOR AID

Perdue said last month when the United States and China looked to be making progress toward a trade deal the Mr Trump administration did not have plans to provide farmers with more aid.

In the past week, however, the draft trade deal fell apart after sources said China reversed on previous commitments.

Farmers have largely supported Mr Trump but have been among the worst hit by the continuing trade war with China. Farm debt has spiked to its highest in decades and credit conditions in the rural economy have worsened.

Two possible outlets Mr Trump could use for sending government-purchased agricultural goods to countries overseas include the Food for Progress food aid program, in which U.S. agricultural commodities are donated to developing countries, and the Food for Peace program, which also provides US food assistance, according to farm economy experts.

But Mr Trump's budget proposed cutting funding for both of those programs. In addition, many products hardest hit by the U.S.-China trade fight - such as soya beans - are used for animal feed, not food for human consumption.

Until the trade war, China bought US$12 billion per year of soya beans from US farmers.

"It is hard to sit in my shoes and see no deal is made," said Lorenda Overman, 57, a grain and soya bean farmer in North Carolina.

"We need a deal. We have borrowed from our life insurance policy, that's how desperate we are. We are desperate for something to happen. We need help."

REUTERS