Rep. Crawford says farmer aid ‘sending a message’ to the world; Sens. Boozman, Cotton prefer ‘trade to aid’

President Donald Trump has authorized the United States Department of Agriculture to release up to $12 billion in aid programs to farmers impacted by his ongoing trade wars with other countries including China and the European Union. U.S. Rep. Rick Crawford, R-Jonesboro, told Talk Business & Politics he continues to support the president on tariffs and trade negotiations.

The USDA aid program that was announced is one tool the federal government can utilize to help farmers as commodity prices have dropped significantly since the trade wars began several months ago.

“The president is sending a message to the global community that we are not going to get kicked around any more … this is a long game,” he said.

Soybean prices have dropped 20% since the trade war started, and it is the top crop grown in Arkansas and especially in Crawford’s First Congressional District. The congressman said prices have ticked upwards in recent days and could be back to about $9 per bushel by the start of the harvest. Crawford said he still believes that China, the largest importer of soybeans in the world, will have to start buying U.S. soybeans. The Chinese haven’t been buying U.S. beans according to published reports since the U.S. announced billions of dollars in tariffs against the Asian nation.

There are three primary soybean producing countries in the world – the U.S., Brazil, and Argentina, Crawford said. A drought decimated the Argentinian crop, leaving Brazil and the U.S. as the only options for the Chinese, he said. At some point, the Brazilian beans will run out and they’ll be forced to buy ours, he said.

“They’ve got to have them,” he said.

To qualify for direct and indirect payments through the aid package, crops prices would have to drop through reference points, and right now the only crop that would qualify is rice, he said. Direct payments aren’t typically made for rice, but indirect payments in the form of the government buying rice are possible, he said.

Crawford isn’t sure if any of the government aid package will have to be utilized, he said. Commodity markets seem to gaining steam and he thinks that may solve the problem before the harvest begins later next month.

“We are seeing the markets move in an upward trajectory,” he said.

Soybean prices have traded as high as $10.50 per bushel earlier this year. Two weeks ago, those prices fell to $8.30 per bushel and were expected to drop further due to the escalating trade rhetoric. On Wednesday (July 25), August bushels rose $2.75 to land at $8.60, and September bushels ended the day at $8.66, also a slight uptick, according to Farm Futures.

Crawford’s Democratic opponent this fall, Chintan Desai, said the administration is to blame for the current crisis, which he contends could have been avoided.

“The ongoing trade war is a terrible idea for farmers, and the president refuses to back down—forcing his administration to bail out farmers from a situation he created,” Desai said on his Twitter account Tuesday.

BOOZMAN, COTTON CAUTIOUS
Arkansas’ Republican senators, John Boozman and Tom Cotton, sent Talk Business & Politics statements more skeptical than Crawford’s views on the aid package, but still supportive of the White House. Boozman said a long-term trade war would negatively impact the state’s economy and it’s not necessary.

“In recent years, our farmers have been struggling with low commodity prices, high input costs and non-tariff barriers to trade. Add escalating retaliatory tariffs to that list and our farmers find themselves facing an extremely difficult economic situation. While I appreciate that the president recognizes our agricultural producers are facing hard times, I have concerns about the devastating impact a drawn-out trade war could have on Arkansas’s largest industry,” he said. “I look forward to learning more about the president’s proposal, but it is clear our producers are looking for solutions that lead to long-term growth, including a fair and equitable Farm Bill, which we are working hard to finalize, and access to new and emerging trade markets. My message to the administration is let’s work together to enact policies that will produce certainty and predictability for not only our farmers, but also the rest of our economy.”

Cotton echoed those sentiments.

“I know the President wants to improve our trade agreements by leveraging these tariffs, and I’m hopeful that he negotiates better deals which will make this government assistance unnecessary. Ultimately, Arkansas’s ranchers, farmers, and foresters much prefer trade to aid.”

U.S. Secretary of Agriculture Sonny Perdue announced Tuesday (July 24) that the USDA will take several actions to assist farmers in response to trade damage from what he called “unjustified retaliation.” President Trump has enacted a number of tariffs against Canada, China, the European Union and Mexico. Those countries and groups have put retaliatory tariffs on American goods – particularly agricultural products such as soybeans – in effect.

The $12 billion figure is an estimate close to a predicted $11 billion impact on agricultural goods that the USDA expects will impact American farmers. The programs will assist agricultural producers to meet the costs of disrupted markets, the USDA said.

Those programs include the 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 qualified 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, according to the USDA.

USDA can 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.

Finally, the CCC can use its Charter Act authority for a Trade Promotion Program administered by the Foreign Agriculture Service (FAS) in conjunction with the private sector to assist in developing new export markets for our farm products.

Late Wednesday, Boozman issued another statement reacting to news that Trump and European Union (EU) Commission President Jean-Claude Juncker were working on an agreement toward easing trade barriers.

The U.S. and E.U. agreed to suspend new tariffs while negotiating over trade. The two countries also pledged to expand European imports of U.S. liquefied natural gas and soybeans, while lowering industrial tariffs, excluding autos.

“I congratulate President Trump and EU Commission President Juncker in taking a very promising step forward for American manufacturers, innovators and agricultural producers. The US and EU can build off this positive momentum to make our robust economic relationship even stronger. Working together, we can make goals like zero tariffs and zero subsidies on non-auto industrial goods a reality,” Boozman said.