U.S. farmers urge lawmakers to continue trade aid until China deal is secure
U.S. farmers are urging House lawmakers to work with the Trump administration to continue the Market Facilitation Program (MFP) as the President Trump’s trade deal with China appears less secure amidst the coronavirus outbreak.
The administration created the MFP in 2018 after Trump imposed tariffs on China, which retaliated by purchasing significantly less American crops. The program was renewed in 2019.
This year’s payments came from a $16 billion aid package announced last year, of which $14.5 billion has been used as direct payments to farmers, according to the Department of Agriculture.
In the recently signed “phase one” trade deal with China, Beijing agreed to increase purchases of U.S. goods by $200 billion over the next two years, including $32 billion on U.S. crops.
U.S. farmers received the last wave of payments in early February, right as the COVID-19 coronavirus began to spread in China, locking down entire metro areas in the country and causing a ripple effect on the global economy. The administration has said that they still expect China to uphold their end of the trade deal amid the outbreak.
“The signals are, they want to comply,” Agriculture Secretary Sonny Perdue said at a House hearing last week.
At the same hearing, Perdue said the likelihood that another wave of MFP payments would come was “less than 10 percent.”
The Agriculture Department announced Tuesday that the first phase of the China trade deal has been implemented, with China purchasing a number of American in-season goods.
“These implementation measures are promising steps showing that China is taking steps to fulfill their purchase commitments,” Perdue said in a statement. “Under President Trump’s leadership, this agreement will produce positive gains for the entire economy, especially our agriculture sector. We look forward to China continuing to achieve their commitments in future months.”
Weeks before, Trump teased the prospect of furthering the MFP, tweeting that “if our formally targeted farmers need additional aid until such time as the trade deals with China, Mexico, Canada and others fully kick in, that aid will be provided by the federal government.”
According to the the latest monthly survey of farmer sentiment by Purdue University and the CME Group, 45 percent of producers expect additional MFP payments this year. This polling was done prior to Trump’s tweet and Perdue’s testimony.
At a House Agriculture Committee hearing on Tuesday, members heard from farmers who have been affected by tariffs. Robb Ewoldt, director of the Iowa Soybean Association, told the committee that MFP payments have only accounted for about a third of profit losses, leading many in the industry to incur debt during the trade war.
“The amount of debt we’ve accumulated, you just can’t pay that by selling corn and beans,” Ewoldt said.
In 2019, the number of farmers filing for bankruptcy hit an eight-year high, according to data released by the federal court system.
It’s still unclear how the new trade deal will affect the soybean market.
Public health officials have warned that the virus, much like influenza, lies dormant during the summer seasons but could surge again in the fall, as U.S. farmers begin to harvest soybeans.
“As far as trade with China picking up, it’s hard to tell when that’s going to happen,” David Salmonsen, an economist with the American Farm Bureau, told The Hill. “That was a historical pattern but now with this coronavirus virus, we’re not sure.”
The Agriculture Department did not respond to a request for comment from The Hill.