Capitol Alert

Trump’s farm aid ‘will fall far short,’ but NAFTA news buoys California farmers

China trade tensions worry US farmers

The U.S. hiked tariffs on Chinese imports and Beijing said it will counterattack in a trade dispute between the world's two largest economies. U.S. farmers worry tariffs will rob them of profits and reduce their ability to compete in the pork market.
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The U.S. hiked tariffs on Chinese imports and Beijing said it will counterattack in a trade dispute between the world's two largest economies. U.S. farmers worry tariffs will rob them of profits and reduce their ability to compete in the pork market.

California farmers are poised to receive hundreds of millions of dollars worth of aid from the U.S. Department of Agriculture to help offset the impact of rising tariffs.

But most of the state’s top agricultural exports will not receive direct cash payments, as they and members of the state’s congressional delegation had pushed for.

California farm groups, however, say they’re more encouraged by the news, also announced Monday, that the White House has reached a preliminary agreement with Mexico in their renegotiations of the North American Free Trade Agreement. The two countries are now hoping to bring Canada, the trade pact’s other member, to the negotiating table to finish updating the agreement.

It’s “extremely welcome news,” said California Farm Bureau Federation President Jamie Johansson, who noted that Mexico is the fifth largest export market for California agriculture. Canada is number two.

The aid package, in comparison, “will fall far short of the potential loss of revenue” California farmers stand to suffer as the result of trade spats with China, the European Union and other parts of the world, Johansson said. But “we knew all along” that would be the case.

The Trump administration announced in July it was putting together a $12 billion farm aid package, an acknowledgment that the president’s trade battles are starting to batter many American farmers. On Monday, Agriculture Department officials provided details on roughly $6 billion in aid it is prepared to distribute, with another tranche of aid to be released, if needed, before the end of the year.

The “economic pressure was already there for farmers,” Agriculture Secretary Sonny Perdue said on a conference call with reporters, noting that farming income has been one the decline. The “additional problems caused by unjustified tariffs could not have come at a worse time.”

The tariffs hitting American farmers this summer come in response to the Trump administration’s own tariff increases, aimed at protecting the steel industry and, separately, at punishing China for its trade practices. Countries including Canada, Mexico, India and Turkey are among those who have increased their taxes on a bevy of American imports.

Agriculture is a particularly popular target, and one that can cause not just economic, but political pain for the White House. The agriculture sector is a core part of the Republican base, particularly in the Midwest.

It’s not surprising then, that the majority of the aid funding will go towards one of the Midwest’s leading crops — soybeans — which have been hit hardest by the rising barriers to trade with China. Soybean farmers are one of seven row crops or agricultural products eligible for direct payments from the government.

Milk, a major California export, is another. According to the USDA, milk producers will receive an estimated $127.4 million in direct cash assistance during the first payment period, which begins Sept. 4 and runs through mid-January. Dairy producers can also participate in a food purchase program, which the federal government operates as part of its nutrition assistance programs for children and the needy.

Most of California’s other leading agricultural exports are eligible for only the purchasing program. The federal government plans to purchase $84.9 million in dairy products, $85.2 million in pistachios, $48.2 million in grapes and $55.6 million in oranges, among other commodities. The sum for almonds is still being finalized. Wine is excluded from the USDA’s aid program, entirely.

California farm groups were hoping that specialty crops — the fruits, vegetables and nuts that dominate the state’s agriculture industry — would be eligible to receive direct cash payments. On July 31, a bipartisan group of California congressmen and women sent a letter to Agriculture Secretary Sonny Perdue expressing concern about “solely relying on a food purchase and distribution program for the extremely diverse and high-value commodities, such as tree nuts, citrus, leafy greens, berries, stone fruit, and potatoes.”

“Any program that is focused on direct payments should be constructed in a way that can also work for the growers of these types of commodities,” the letter continued.

It appears to have fallen on deaf ears. Johansson said that was not a surprise. But it will certainly not increase local farmers’ patience with the president’s trade stand-offs.

Ending the uncertainty over NAFTA, on the other hand, would be great news for California farmers. Both Canada and Mexico are leading export destinations for the state’s agricultural products, particularly dairy, vegetables and citrus fruits. Inking a deal would also eliminate tariffs the three countries have levied on one another this year.

The agreement with Mexico is “going to lead to more jobs for American workers and farmers, but also more jobs for workers and farmers from Mexico,” U.S. Trade Representative Robert Lighthizer told reporters.

Officials were far less optimistic about the prospects for a trade detente with China. “It’s just not right time to talk right now, to be honest, with China,” Trump said in remarks at the White House on Monday. “It’s been too one-sided for too many years, for too many decades. And so it’s not the right time to talk.”

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