Perdue to farmers: No more trade bailouts
USDA secretary expects China trade resumption, despite coronavirus
U.S. Agriculture Secretary Sonny Perdue warns farmers not to expect additional trade handouts this year. (USDA/Lance Cheung)
By Ted Cox
President Trump’s agriculture secretary is warning farmers not to expect additional trade bailouts this year.
Speaking at the 24th annual Commodity Classic in San Antonio last week, Agriculture Secretary Sonny Perdue told farmers, “Don’t make plans in 2020 for another MFP payment,” according to a story published by FarmWeekNow.com.
Trump authorized $12 billion in farm handouts in 2018 under what his administration called the Market Facilitation Program, meant to make up for farm income lost in his trade war with China, Canada, and Mexico. His administration passed out another $16 billion to farmers last year, and the $28 billion total is more than double the auto-industry bailout approved by President Obama in the midst of the Great Recession a decade ago.
Trump has touted that those bailouts are paid for by the tariffs charged on imported goods from those countries, but those tariffs are paid by U.S. importers and ultimately consumers. Critics have called it a tax hike with the revenue being funneled to farmers. U.S. Sen. Dick Durbin has also charged that they’ve gone disproportionately to Southern cotton farmers rather than Midwest soybean growers hurt most by the trade war with China.
Perdue praised the recent completion of a new trade deal with Canada and Mexico, as well as the first phase of a new set of trade agreements with China calling for that nation to import $40 billion in U.S. agricultural goods — although that trade has yet to materialize, he admitted, as it’s been delayed in part by the outbreak of coronavirus in China.
“Make the best decisions you can for your farm in 2020 and plan for the markets. We believe prices will rise,” Perdue said. “Don’t make plans in 2020 for another MFP payment.”
“Don’t make plans in 2020 for another MFP payment.”
Agriculture Secretary Sonny Perdue (Twitter/Farm Progress Show)
Just last week, Illinois Farm Bureau President Richard Guebert Jr. renewed the call for trade, not aid in testimony before a congressional committee.
“Coronavirus has us all concerned right now. It’s had a big impact on both the stock and commodity markets,” Perdue said. “Hopefully, we can get past this pandemic and get back to trade. We’ve got some good deals out there.”
Perdue nonetheless expressed confidence that Chinese agricultural trade will resume. “There’s hard-line numbers of expectations, and we’re seeing evidence China plans to follow that,” he said. “USDA also is building a matrix to track sales to China.”
The ag secretary defended the Market Facilitation Program, even as he emphasized it was always meant to act as a trade stopgap and was never intended to be permanent.
“There’s no way you can make anyone whole, but it made a lot of difference to the bottom line,” Perdue said.
“The MFP payments were authorized as a trade-damage mechanism to make up for income lost through trade,” he added. “It was never designed as a price-support program.”
Perdue said he expects renewed trade to increase demand and raise crop prices, and that he also expects increased demand from year-round sales of E-15 ethanol gasoline and a decline in ethanol exemptions granted to refineries — a persistent sticking point over the last year for farmers reliant on sales of biofuels.
He also added that crop insurance would help hold up farm revenue and that Trump might consider additional farm handouts if the expected trade doesn’t come through.