The Trump administration is set to announce Tuesday a plan to provide billions in aid to farmers to help shield them from the impact of a trade war in which agriculture is a main target for retaliation against U.S. tariffs, a person familiar with the plans said.
Agriculture Secretary Sonny Perdue has been promising an aid package for months, and department officials have said farmers may get assistance through government purchases of commodities using a Depression-era program. Administration officials and lawmakers have also discussed stepped-up trade promotion measures as a way to help farmers.
The supports 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 U.S. pork, soybeans and other crops. While emergency government commodity buys are rare, they’re not unheard of. President Barack Obama allocated $170 million to help farmers struck by drought in 2012. The current USDA move is expected to be much larger.
Farmers are a key part of the rural political base that elected President Donald Trump, who has promised them they will emerge from a trade war better off. 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. Trump also has been under pressure from farm state lawmakers to back away from imposing tariffs.
The announcement of the plan on Tuesday would give the president a talking point when he travels Thursday to Iowa, the top U.S. soybean-producing state and the home state of Republican Senator Chuck Grassley, who’s been critical of Trump’s moves on trade. Perdue said last week that the aid plan wouldn’t be ready until the first week of September.
Grassley said Tuesday that commodity supports aren’t a long-term solution and will be costly to taxpayers. Farmers would prefer trade to aid, he said 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.
Stocks of farm equipment makers including Deere & Co. gained on reports of the planned announcement of aid to farmers. Deere shares rose 4.6 percent, more than any full-day gain since May 18. Soybean futures for November delivery gain as much as 1.4% to $8.75 1/4 a bushel on the Chicago Board of Trade, the contract’s highest since July 10.
Agriculture is the rare U.S. industry that runs a trade surplus, with a projected $21 billion this year. Canada, China and Mexico are the three biggest buyers of U.S. farm goods, accounting for 43 percent of purchases in 2017. All three are embroiled in conflicts with the U.S.
Soybeans, the second-most valuable U.S. 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.
U.S. farm profits were already projected to reach a 12-year low before any trade actions were announced. Farmer organizations 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, asking Trump to develop a farm plan. “Without prompt action, we could lose farmers and the rural businesses they support and depend on at an even more rapid rate.”