We have a simple request of the Trump administration. Stop messin’ with farmers and give them a single, consistent message about the trade deal with China.
Back in January, Trump signed a Phase One trade agreement with Chinese Vice Premier Liu He. He said China would buy $40 billion in U.S. agricultural products both this year and next. Trump crowed U.S. farmers should “buy a larger tractor” and “a little more land” to meet the terms of the trade deal.
Yet, on Friday, USDA Chief Economist Robert Johansson predicted in his 2020 crop forecast a mere $4 billion increase in U.S. agricultural exports with fairly flat prices for soybeans and falling prices for corn.
USDA Secretary Sonny Perdue made things murkier. Export forecasts will improve, he said, that is, as long as the coronavirus in China is brought under control. Perdue said China has promised to buy more U.S. ag exports, but, if they don’t, the U.S. could unilaterally impose new sanctions on Chinese exports.
“We’ve got hard-line numbers on an annual basis, and we expect China to live up to that,” Perdue said. “Ambassador Lighthizer has, in the agreement that is signed and dated, hard-line enforceable numbers that are unilaterally enforceable by the implementation of more tariffs if they don’t live up to that.”
Then President Trump himself got into the act. The president tweeted that in the event China did not ramp up imports of U.S. agricultural goods, the federal government would pay for new Market Facilitation Program payments to farmers to help them survive the trade war.
“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, paid for out of the massive tariff money coming into the USA,” he said.
The president’s statement, however, contradicted Perdue who that afternoon said that, barring unforeseen circumstances, there won’t be any further Market Facilitation Program payments. “So I would not anticipate — and I’m not advising any farmer to expect — a Market Facilitation Program at this point,” Perdue said. “They have got to farm for the market and what it’s telling them and what their capabilities are from a production perspective.”
The president was also contradicted by others at USDA. The agency is ready to end the Market Facilitation Program, a spokesperson said, because the Chinese have agreed to lower tariffs on pork and soybeans. “We’re looking at a drop in government payments for the sector as a whole of almost $9 billion,” said USDA economist Carrie Litowski.
What a jumbled mess. After two years of a punishing trade war, Trump announced a major trade breakthrough, but one the USDA doesn’t much believe in and that, in its opinion, won’t revive corn and soybean prices. The president then acknowledged as much, promising more Market Facilitation Program payments. But the USDA, who has to mail the checks, said the Phase One agreement means the program must end.
Let’s put aside the question of whether the Trump administration was wise to confront the Chinese starting in July 2018 with tariffs up to 25 percent on $450 billion worth of goods. And, likewise, let’s sidestep the question of whether it was good policy for USDA to send farmers $28 billion in payments (democratic socialism, anybody?) to soften the impact of Chinese retaliatory tariffs on major commodities, including corn, soybeans and pork, but also on speciality crops, including ginseng.
We can insist, however, that the Trump administration explain what the Phase One agreement will mean to American agriculture. Right now, things are as clear as Wisconsin mud.
This time of year, farmers, many struggling to survive, are making critical decisions about planting or, further, whether they should stay in the business.
These men and women have borne the brunt of Trump’s trade war. At the very least, they deserve some straight talk out of USDA and the White House.
Editorial by Peter Weinschenk, The Record-Review