On Tuesday, July 24, 2018, the Trump Administration announced emergency relief up to $12 billion for farmers that have been pinched by ongoing trade wars. The relief efforts are meant to help mitigate some of the coming financial losses as a result of the president’s trade policies. The United States Department of Agriculture estimates losses totaling around $11 billion as a direct result of the trade disputes.
The aid announcement came from the US Department of Agriculture, which will utilize the emergency relief funds to go towards direct payments to farmers of affected commodities, such as soybeans, wheat, fruits, sugar, hogs, and others.
The Trump Administration also plans to buy up unsold crops and distribute the produce to food banks and government nutrition programs. A small portion of the relief funds will be used to help boost exports.
While the emergency fund is expected to become active in September, the relief is intended to be short-term solution with plans to last under a year.
“This is a short-term solution that will give President Trump and his administration time to work on long-term trade deals that benefit agriculture and all sectors of the economy,” details US Agriculture Secretary Sonny Perdue.
Agriculture industry groups have been firm in stating their preference to “trade, not aid.” Some politicians from agricultural states have also denounced the plan as well.
“Time and time again I’ve heard from farmers that they want trade, not aid. Instead of throwing money at a problem we’ve helped create, the better option is to take action to make it easier for our farmers — and manufacturers — to sell their goods at fair prices to consumers around the world,” said Senator Ron Johnson, a Wisconsin Republican.
Not only does the US agricultural industry rely on 20% of total income from exports, but farm products make up one of the largest sources of the United States’ total exports. As a result, the US farm industry has been an early target of retaliatory tariffs from China, Canada, Mexico, the EU and others.
Despite the huge risks and fierce criticism from farmers, which represent a large and important part of the president’s support base, the emergency relief announcement shows the Trump Administration may not be backing down from the escalating trade disputes. President Trump has stated that farmers may feel some short-term pain, but will be better off down the road once new trade agreements are negotiated.
Lean hogs are the worst performing commodities through July 2018, with year-to-date (YTD) losses of nearly 27%. Sugar is close behind with YTD loss of 26.32%. Soybeans have dropped 10.14%, soybean oil sputtered 15%, and cattle has dipped 9.26% through July 2018.