Minn. farm groups welcome aid but say end to trade war would be better

Winter Camelina oilseed crop is harvested
The U.S. Department of Agriculture announced a $12 billion assistance package for farmers hurt in the ongoing trade war.
Courtesy of Russ Gesch | USDA ARS 2016

Help is on the way for Minnesota farmers suffering lost income from the trade wars. The U.S. agriculture department announced on Tuesday a $12 billion assistance package. Farm groups welcome the aid, but they say an end to the trade disputes would be a better solution.

China, Mexico, Canada and the European Union have all placed tariffs on different U.S. farm exports in retaliation for U.S. tariffs on their products. The trade disputes are reducing sales of U.S. farm products overseas and sending the prices of those products lower.

In announcing the farmer assistance program, USDA Secretary Sonny Perdue sent a signal that the Trump administration is willing to help U.S. industries hurt in the trade war.

"The programs we're announcing today are a firm statement that other nation's cannot bully our agricultural producers, to force the United States to cave in," said Perdue.

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Perdue said the farmer assistance program will pay farmers directly for their trade-related losses. Those losses could be significant.

A 20 percent drop in soybean prices since the tariff threats began last spring represents about an $8 billion loss for U.S. farmers, including some $700 million for Minnesota producers.

Other sectors facing red ink in the trade wars include dairy and pork. Rob Larew with the National Farmers Union says the Trump administration's aid program is a good start, but said what farmers really need is an end to the trade war.

"It's really not going to be adequate," said Larew. "And we are going to be pushing the administration for a long-term solution. Because we are going to be facing price challenges across all of agriculture for I think several years."

The proposed $12 billion figure is probably far short of losses already incurred by crop, livestock and dairy producers in the trade disputes, he said. The trade disruptions came at a time when many farmers were already struggling. The last four years have been tough ones in agriculture, with the price of many farm commodities at or below break even.

One unknown factor is whether the farm announcement will prompt bailout requests from other sectors of the economy, said Robert Kudrle who specializes in trade and investment issues at the University of Minnesota.

"It would require a kind of subsidy program that is very, very difficult to imagine," said Kudrle.

Any kind of assistance for other parts of the economy is made more difficult by expected large federal deficits, he said.

"The possibility of a trade war is higher now," said Kudrle. "And not just as a temporary thing, but as something that could go on for the indefinite future. And farmers are worried about that but so is most of the rest of the economy I think."

The USDA said it will announce details of the farm assistance program by Labor Day, including an indication of how much money individual farmers can expect to receive. The program will also buy surplus farm products for distribution through food banks and other outlets. And it will help farmers find new foreign markets for their commodities.