The $16 billion in aid to farmers that the Trump administration announced Friday is an increase on the $12 billion aid package last year. Administration officials said the total amount of aid was hiked and the formula for distributing it tweaked because of the broadening nature of President Trump’s trade war with China and other countries.
“We account[ed] for some other variables such as repeated distortionary trade policies by China and other countries that have contributed to the slow pace of market adjustment and trade that we’ve seen for agricultural production,” Agriculture Department chief economist Robert Johansson told agriculture industry reporters Thursday. “So that brings us to the $16 billion level.”
The bulk of the aid will be provided through the agency’s Commodity Credit Corporation, which provides price supports for farmers and doesn’t require congressional approval. The program gets $30 billion annually that can be distributed at the agriculture secretary’s discretion.
“It is using CCC funding,” Agriculture Secretary Sonny Perdue told reporters. “The president feels very strongly that the tariff revenue [from levies on China] is going to be used to support this program, which will come back out and replenish the CCC, as it does every year.”
The program’s funding is not directly tied to any tariffs, however. Congress appropriates CCC funding through the farm bill, legislation passed about once every five years to cover agriculture subsidies. The most recent version was 2018’s Agricultural Improvement Act, which totaled $867 billion.
American Farm Bureau Federation President Zippy Duvall applauded the assistance, but said that farmers and ranchers would rather the U.S. ended the trade wars instead. “We are grateful for the work that President Trump and Secretary Perdue have devoted to this issue,” he said. “However, the real, long-term solution to our challenges in agriculture is good outcomes to current negotiations with China, Japan and the European Union, as well as congressional approval of the U.S.-Mexico-Canada Agreement.”
Of the $16 billion in aid this year, $14.5 billion will be provided to farmers in direct payments, the same method as the aid package last year. The formula for determining payments was tweaked, however.
Last year’s aid package provided payments to farmers based on the crops they had planted. The aid program announced Thursday will factor in a rate assigned to the county the crops were planted in. Those rates would be based on the USDA’s estimation of the economic damage done by retaliatory tariffs.
“We are looking back a number of years to look at what China has purchased from us in the past, and we’re bringing that into our baseline,” Johansson said.
Payments will go to producers of alfalfa, barley, canola, corn, peas, cotton, lentils, rice, mustard seed, dried beans, oats, peanuts, sesame seed, chickpeas, sorghum, soybeans, sunflower seeds, and wheat, among other products, based on a farm’s total plantings of those crops for this year multiplied by the per-county rate. Pork producers will receive payments based on their livestock headcount, and dairy producers will receive payments based on their past production levels.
The payments will be made in up to three tranches, the first coming in late July or early August, with later payments to be determined based on market conditions. The remaining $1.4 billion will be used to purchase surplus beef, pork, lamb, poultry, and milk.
It is unclear exactly how much of last year’s $12 billion allocation was ultimately spent. Perdue told the Senate Agriculture Committee in February, “To date, [assistance] programs have provided more than $8 billion to assist with the disruption in commodity markets caused by unfair tariffs on U.S. agricultural products.”
