US farmers have been granted £3.65 billion in compensation to offset direct loss of income due to global retaliation for tariffs imposed by the Trump administration, writes John Wilkes.
This allocation is part of a £9.3bn trade mitigation package.
The US Department of Agriculture (USDA) Market Facilitation Programme will administer the payout.
Big winners are soybean farmers with £2.82bn (£60/tonne) and the pork industry at £225.5 million (£6.22/head).
Soybean growers can soon expect 50 per cent payment on the 2018 crop. Remaining remuneration is dependent upon market volatility later in the year.
Others supported by the £3.65bn programme include cotton, sorghum, dairy, wheat and corn (maize).
Farmers’ individual entitlement for harvested crops is £93,000. An applicant’s gross farm income must not exceed £700,000/annum.
After October 1, USDA’s Agricultural Marketing Service has authority to ‘buy back’ US farm produce of £958m. Farm commodities purchased appear in nutritional programmes that support low-income American families.
The likelihood is £432m for American pork, £66m for dairy products and £11.5m for beef. A range of 25 fruits and vegetables is also underwritten.
A separate tranche of £155m is destined for the Agricultural Trade Programme. Funds can be used for advertising, PR, market research and trade fair attendance and/or promotion. The agriculture industry, including fish and forestry, is eligible.
American soybean and hog farmers are enthusiastic; dairy, wheat and corn producers less so. American growers are due £4/t in compensation for wheat and £0.39/t for corn.
Understandably, there is mixed reaction from farm groups about payment levels. US agriculture is under pressure with net farm income in 2018 set to equal 2016 levels; the lowest since 2002.
A spokesperson for the National Association of Wheat Growers (NAWG) said: “The ongoing trade war will cause a $0.75/bushel [£21/t] decrease and a reduction in global wheat production.
“NAWG appreciates the administration’s steps to hold China accountable for unfair trade practices, but tariffs and the subsequent self-inflicted need to provide aid are not the answer. Farmers across the country want ‘trade, not aid’, especially wheat growers.”
The geography of agricultural sector recipients of the bulk of compensation may be coincidental.
However, most US soybean and pork producers are located primarily in key states President Trump won in 2016.
With the upcoming mid-term elections, retention of Republican House seats in these states is vital for the President and the Republican Party.