US planning to support farmers amid China trade spat: Agriculture secretary

US Agriculture Secretary Sonny Perdue had said last month the Trump administration did not have plans to provide farmers with more aid.
US Agriculture Secretary Sonny Perdue had said last month the Trump administration did not have plans to provide farmers with more aid.PHOTO: AFP

WASHINGTON (REUTERS) - US Agriculture Secretary Sonny Perdue said on Friday (May 10) that US President Donald Trump had asked him to create a plan to help American farmers cope with the heavy impact on agriculture of the trade war with China.

A new aid program would be the second round of assistance for farmers, after the US Department of Agriculture’s US$12 billion plan last year to compensate for lower prices for farm goods and lost sales stemming from trade disputes with China and other nations.

“While China may backtrack, @POTUS is steadfast in his support for US farmers and directed @USDA to work on a plan quickly,” Perdue said on Twitter on Friday.

A USDA spokeswoman was unable to give further details on the plan.

Perdue said last month when the United States and China looked to be making progress toward a trade deal the Trump administration did not have plans to provide farmers with more aid.

In the past week, however, China weakened commitments for reform that it had made in negotiations for a deal to end the trade war.

Since then, the dispute has escalated and Trump raised tariffs on US$200 billion of Chinese goods on Friday.

 

Farmers have largely supported Trump but have been among the worst hit by the continuing trade war with China. Farm debt has spiked to its highest in decades and credit conditions in the rural economy have worsened.

Perdue’s statement came after Trump posted on Twitter that the US will use money drawn from Chinese tariffs to purchase farm goods from farmers.

“With the over 100 billion dollars in tariffs that we take in, we will buy agricultural products from our great farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance,”Trump wrote on Twitter.

Trump said that if the United States bought US$15 billion in agricultural products from farmers, the government would still have more than US$85 billion left from the tariffs.

Tariffs on Chinese goods are paid to the US government by importing companies. Most importers of Chinese-made goods are US companies, or the US-registered units of foreign companies that import goods from China.

Tom Vilsack, who was USDA secretary under former President Barack Obama, said the Trump administration could not directly tap funds drawn from Chinese tariffs to unilaterally purchase agricultural goods. Trump would need Congress to pass an appropriations bill allowing such expenditures, he said.

“I don’t think he understands that he’s not a dictator,”said Vilsack, who is now chief executive of the industry group US Dairy Export Council. “He can’t just order this to happen.” The Trump administration could tap funds from the Commodity Credit Corporation (CCC), Vilsack said. The CCC is a branch of the USDA that has broad authority to make loans and direct payments to US growers when prices for corn, soybeans, wheat and other agricultural goods are low.

The White House previously used CCC funds to offset farm income losses in trade disputes.

“I think he’s finally realised that the Chinese tariffs have put a real strain on the countryside, and that if more tariffs are put on, the strain is going to get even worse,” Vilsack said.

Negotiators from Washington and Beijing met on Friday for the latest round of trade talks but Trump said on Friday morning there was “no rush” to reach a deal.

Soy futures dropped to their lowest prices since December 2008 on Thursday.

Soybeans were previously the single most valuable US

agricultural export crop, and until the trade war, China bought US$12 billion-worth a year from US farmers.

“It is hard to sit in my shoes and see no deal is made,”said Lorenda Overman, 57, a grain and soybean farmer in North Carolina.

“We need a deal. We have borrowed from our life insurance policy, that’s how desperate we are. We are desperate for something to happen. We need help.”