Key Lawmakers Skeptical of Plan to Make 'Farmers Whole'

Minnesota Rep. Collin Peterson worries about "bailout" for farmers hurt by US-China trade dispute. ( Farm Journal )

(Bloomberg) -- Leading lawmakers on congressional agriculture committees said Tuesday they’re skeptical that the White House can fix any economic harm for farmers arising from a trade dispute with China by giving them temporary aid through the Agriculture Department.

"We don’t need another subsidy program, we need to sell our product," Republican Senator Pat Roberts of Kansas, chairman of the Senate Agriculture Committee, said at a meeting of agricultural reporters in Washington. "If we do that, we don’t need some sort of crazy-quilt program."

President Donald Trump promised U.S. farmers on Monday they will emerge better -- even though Beijing has threatened to impose tariffs targeting U.S. agricultural products -- in part by directing the Agriculture Department to find ways to shore up finances that could be harmed by lower exports.

One option could be to use the department’s authority under the Commodity Credit Corporation, a federal entity that funds farm subsidies, to buy surplus U.S. crops, Steve Censky, deputy secretary of the USDA, said Monday.

Such a move would set a bad precedent by politicizing farm payments, said Representative Collin Peterson of Minnesota, the top Democrat on the House Agriculture Committee.

‘One-Time Bailout’

"I am against a one-time bailout of a situation created by the administration," Peterson said. Farmers "want their markets left intact and not screwed up by some policy. Giving them money isn’t necessarily going to buy them off."

Peterson proposed using a farm bill, due for reauthorization by Sept. 30, as a way to deal with trade disruptions.

He said farmers currently enrolled in subsidies based on overall revenue should be allowed to switch into programs sensitive to falling prices, the likely outcome of any trade war. Peterson also called for a 10 percent increase in the so-called target price for crops such as corn, soybeans and cotton. That subsidy pays farmers during times of low crop prices covering the difference between what they’re paid for a commodity and a floor set by the government.

While the moves could significantly increase farm subsidies, their cost shouldn’t be a concern "in an era when paying for stuff isn’t important," Peterson said. Congress passed a tax-overhaul plan in December that’s projected to decrease federal revenue by almost $1.5 trillion over the next decade and a $1.3 trillion spending bill last month that raises funding for defense and domestic programs.

Roberts later dismissed Peterson’s idea, saying "there’s no new money" to boost farm payments.

$50 Billion

China last week announced $50 billion worth of tariffs on American products including soybeans and pork in retaliation for Trump’s plan to impose duties on 1,333 Chinese products. The biggest potential impact will be in rural areas that long have been part of the Republican base. Eight of the 10 biggest soybean-producing states went for Trump in the 2016 election and three of those will feature close Senate races in November.

Soybeans, the second-most valuable U.S. crop after corn, would be especially hard-hit -- exports to China accounted for more than one-third of the oilseed’s revenue last year. Farmer organizations including the American Soybean Association have called the impacts of tariffs on agriculture "devastating," even as farmers who are supporters of the president have taken a more wait-and-see approach.


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