ANNOUNCEMENT 24 Jul 2018

The United States will respond to the estimated $11 billion impact of other countries’ retaliatory tariffs on U.S. agricultural goods by authorizing up to $12 billion in programs that are intended to assist agricultural producers in meeting the costs of disrupted markets.

 

NUMBER OF INTERVENTIONS

4

  • 4 harmful
  • 0 neutral
  • 0 liberalising
Inception date: 24 Jul 2018 | Removal date: open ended
Still in force

Financial grant

On July 24, 2018 Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) will take several actions to assist farmers in response to the damage done by other countries’ retaliation against U.S. trade measures. Under President Trump’s direction, USDA will “craft a short-term relief strategy to protect agricultural producers while the Administration works on free, fair, and reciprocal trade deals to open more markets in the long run to help American farmers compete globally.” More precisely, USDA will respond to the estimated $11 billion impact of the other countries’ retaliatory tariffs on U.S. agricultural goods by authorizing up to $12 billion in programs that are intended to assist agricultural producers in meeting the costs of disrupted markets.

The administration observes that “a disproportionate amount” of the foreign retaliation “was targeted directly at American farmers,” affecting “a host of U.S. commodities, including field crops like soybeans and sorghum, livestock products like milk and pork, and many fruits, nuts, and other specialty crops.” The USDA announcement also said “there is evidence that American goods shipped overseas are being slowed from reaching market by unusually strict or cumbersome entry procedures, which can affect the quality and marketability of perishable crops.”

The USDA’s response will be based on three programs, namely the Market Facilitation Program, a Food Purchase and Distribution Program, and a Trade Promotion Program. By relying on its existing authorities, the administration appears to have avoided the necessity of seeking congressional approval for its plan. 

The Market Facilitation Program, authorized under The Commodity Credit Corporation (CCC) Charter Act and administered by Farm Service Agency (FSA), will provide payments incrementally to 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.

On August 27, 2018 the USDA announced further details on this aspect of the policy. For each commodity covered, the payment rate will be dependent upon the severity of the trade disruption and the period of adjustment to new trade patterns, based on each producer’s actual production. Interested producers can apply after harvest is 100 percent complete and they can report their total 2018 production. Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income (AGI) for tax years 2014, 2015, and 2016 of less than $900,000. Applicants must also comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations. On September 4, 2018, the first MFP payment periods will begin. The second payment period, if warranted, will be determined by the USDA.

The USDA will make $4,696,300,000 available under this MFP program, the bulk of which ($3,629,700,000) will go to soybean producers. Other supported commodities are cotton, corn, milk, hogs, sorghum, and wheat. The initial MFP payment will be calculated by multiplying 50 percent of the producer’s total 2018 actual production by the applicable MFP rate. If CCC announces a second MFP payment period, the remaining 50 percent of the producer’s total 2018 actual production will be subject to the second MFP payment rate.

 

Inception date: 24 Jul 2018 | Removal date: open ended
Still in force

Public procurement, nes

The USDA will also use CCC Charter Act and other authorities to implement a Food Purchase and Distribution Program through the Agricultural Marketing Service to purchase unexpected surplus of affected commodities such as fruits, nuts, rice, legumes, beef, pork and milk for distribution to food banks and other nutrition programs. As further elaborated in the August 27, 2018 announcement, the largest share of the $1,238,800,000 dedicated to this program will go to hog producers ($558,800,000); other large recipients include producers of apples ($93,400,000), pistachios ($85,200,000), dairy ($84,900,000), grapes ($48,200,000), and fresh oranges ($55,600,000). 

Inception date: 24 Sep 2018 | Removal date: open ended
Still in force

Financial grant

On September 21, 2018 Secretary of Agriculture Sonny Perdue announced the addition of commodities to the trade mitigation package. Starting September 24, producers of shelled almonds and fresh sweet cherries may apply for Market Facilitation Program (MFP) payments at their local Farm Service Agency office. A payment will be issued on 50% of the producer’s total production, multiplied by the MFP rate for a specific commodity. A second payment period, if warranted, will be determined by the USDA. The initial MFP payment rates will be $0.03 per pound for shelled almonds and $0.16 per pound for fresh sweet cherries.

Inception date: 31 Jan 2019 | Removal date: open ended
Still in force

Other export incentive

The CCC will also use its Charter Act authority for a Trade Promotion Program administered by the Foreign Agriculture Service "in conjunction with the private sector to assist in developing new export markets for our farm products." As further elaborated in the August 27, 2018 announcement, "The ATP will provide cost-share assistance to eligible U.S. organizations for activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research, and technical assistance. Applications for the ATP will be accepted until November 2, 2018 or until funding is exhausted. Funding should be allocated to eligible participants in early 2019. The ATP is meant to help all sectors of U.S. agriculture, including fish and forest product producers, mainly through partnerships with non-profit national and regional organizations." The USDA allocated $200,000,000 for these activities. 

The CCC further elaborated on these plans by publishing in the August 30, 2018 Federal Register a rule to implement the Agricultural Trade Promotion Program (ATP). The rule makes no explicit reference to the larger, retaliatory environment in which the program is being established, apart from observing that the program will "help U.S. organizations that promote the export of U.S. agricultural commodities adjust to changes in export markets due to recent trade disruptions by providing funding to modify promotional efforts in disrupted markets and to increase promotional efforts in undisrupted markets." It observes that the ATP will "provid[e] assistance to U.S. agricultural industries to conduct activities that promote U.S. agricultural commodities in foreign markets for commodities impacted by tariffs, including activities that address existing or potential non-tariff barriers to trade." The rule specifies eligibility requirements, activities eligible for reimbursement, contribution requirements, and application procedures for the ATP. 

On January 31, 2019 U.S. Secretary of Agriculture Sonny Perdue announced that his department had awarded $200 million to 57 organizations through the Agricultural Trade Promotion Program (ATP) to help U.S. farmers and ranchers identify and access new export markets. Major recipients included the American Soybean Association ($21,882,165), the U.S. Meat Export Federation ($17,556,680), the U.S. Grains Council ($13,944,690), Food Export USA Northeast ($13,890,275), the Food Export Association of the Midwest USA ($13,859,825), and the Southern United States Trade Association ($12,592,090).