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Abu Dhabi, UAESaturday 18 August 2018

Trump to announce plan to shield farmers from trade war

Assistance will be mix of payments to farmers, commodity purchases, and stepped up promotion of new US export markets

The Trump administration has announced up to $12 billion in aid to farmers hurt by a tariff war with trading partner countries of the US. AFP
The Trump administration has announced up to $12 billion in aid to farmers hurt by a tariff war with trading partner countries of the US. AFP

The Trump administration will deliver $12 billion (Dh44bn) in aid to farmers who have been hit by dropping prices for crops and livestock amid a burgeoning trade war in which agriculture is a main target for retaliation against US tariffs.

The assistance will be a mix of direct payments to farmers, commodity purchases for food-aid programs, and stepped up promotion of new US export markets, Agriculture Secretary Sonny Perdue told reporters on Tuesday.

Repubicans from farm states have criticised the plan saying farmers' welfare would be better served by an end to the trade war, which is already dragging down prices for soybeans and other crops.

“There will never be enough money to solve the problem” created by Chinese duties on US farm goods, said Senator Jerry Moran of Kansas, a Republican. “Farmers are ranchers who recognise that the Trump administration cares about them. They are worried about tariffs.”

The plan for providing price supports, which does not need congressional approval, was rolled just two days before Mr Trump is set to travel to Iowa, the top US soybean-producing state.

Mr Perdue said more details about the aid will be announced by the beginning of September, which was the timeline he laid out last week.

Extra farm aid would be a balm to producers who are seeing prices drop and inventories rise because of disputes with China, Canada and other trade partners who are significant purchasers of US pork, soybeans and other crops.

Farmers are a key part of the rural political base that elected Mr Trump, who has promised them they will emerge better from the trade war. Many farmers are accepting that message. Still, an extended trade dispute that lingers into the fall harvest – and elections – holds the potential to shake that support. Mr Trump also has been under pressure from lawmakers to back away from imposing tariffs.

“The farmers will be the biggest beneficiary, watch, we are opening up markets, you watch what is going to happen, just be a little patient, they are all aiming at anyone who likes me,” Mr Trump said during a speech Tuesday in Kansas City.

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Also read: China set to launch trade counter attack on US at Brics meeting in South Africa

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Farm goods covered would range from major commodities such as soybeans, wheat and milk to legumes and nuts, depending on the program. Farmer sign-ups will begin later this year, after the fall harvest, the US Department of Agriculture said.

Mr Perdue said president Trump “has promised that he had the back of every American farmer and rancher.” The assistance is “a firm statement that other nations cannot bully our agriculture producers to force the United States to cave in.”

Republican Senator Chuck Grassley of Iowa, who has been critical of Mr Trump’s moves on trade, said farmers would prefer trade to aid, during a conference call with reporters.

“The president’s going to have to say more than ‘I like the farmers and I support the farmers’,” he said.

Agriculture is the rare US industry that runs a trade surplus, with a projected $21 billion this year. Canada, China and Mexico are the three biggest buyers of US farm goods, accounting for 43 per cent of purchases in 2017. All three are embroiled in conflicts with the US.

Soybeans, the second-most valuable US crop after corn, have been especially hard hit – exports to China accounted for about one-third of the oilseed’s revenue last year. The USDA projected earlier this month that average soybean prices paid to farmers would fall 75 cents to $9.25 a bushel next year.

US farm profits were already projected to reach a 12-year low before any trade actions were announced. Farmer organisations, including the American Soybean Association, have called the impacts of tariffs on agriculture “devastating.”

Trade conflicts “are having a real and costly impact on the rural economy and the ability of rural businesses to keep their doors open,” said Wisconsin Senator Tammy Baldwin, a Democrat.

While emergency government commodity buys are rare, they are not unheard of. President Barack Obama allocated $170 million to help farmers struck by drought in 2012.

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