The Trump administration said Tuesday it would offer up to $12 billion in support to U.S. farmers who are being excluded from export markets because of the ongoing trade war between the U.S. and its major trading partners.
Those payments are allowed under federal law governing the Commodity Credit Corporation, a Department of Agriculture agency that was created in 1933 to provide price support for farmers.
The CCC is allowed to draw funds from the U.S. Treasury without needing any additional authorization from Congress. According to a Congressional Research Service report, the CCC has “permanent indefinite authority” to borrow money up to a limit set by Congress, which is currently $30 billion.
CCC-funded programs are defined as mandatory spending that don’t require congressional appropriation, CRS said. Additionally, the agency is allowed to have nonrecoverable losses and routinely makes several billion dollars of nonrecoverable payments each year.
In a statement, USDA said CCC aid will go toward producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs.
“This support will help farmers manage disrupted markets, deal with surplus commodities, and expand and develop new markets at home and abroad,” USDA explained in a brief statement describing the plan.
But USDA didn’t explain several key details about how it will work. For example, it didn’t say whether it would be offering loans, direct payments that don’t need to be reimbursed, or some combination of the two.
USDA’s statement left open how payments would be calculated — for example, whether it would pay the difference between current prices and a higher baseline price for commodities — and how the money might be divided up between various commodity groups.
Also unknown is how USDA will implement another part of the plan to buy up and distribute U.S. commodities to help ease the pressure on farmers or how much USDA will spend on that piece.
Mace Thornton, executive director of communications for the American Farm Bureau Federation, told the Washington Examiner that many of these key details were unknown to industry groups as of Tuesday. But he said he expects that farmers will have to sign up to receive the aid, which is meant as a short-term fix until Trump negotiates a trade truce.
“We are hopeful this will allow time for some real progress on the overall trade issue and offer a measure of temporary relief,” he said. “We will continue to push for an end to the trade war and, even then, there will be much work to do to regain markets and repair the damage.”
Farm Bureau President Zippy Duvall similarly said his group was grateful for Trump’s aid, but said farmers will keep pushing for “trade and restoring markets.”
According to a USDA official, payments to farmers are expected to begin in September and will run through the end of harvest time. Farmers using the program must provide proof of production to get the payments, this official said.
[Opinion: Emergency farm aid is a New Deal solution to a stupid #MAGAnomics problem]
