Trump compensates farmers with tons of dollars

The White House in the United States already announced in May that it will pay $16 billion in damages to the agricultural sector as a result of President Donald Trump's trade wars. Now the distribution key has also been presented. The amounts can amount to 5 tons per agricultural entrepreneur.

Trump also uses market intervention by buying up stocks to boost market prices. US grain, dairy and pork exports have been hit hard in recent months by import duties imposed by China, Mexico and Canada, among others. The countries did this in retaliation for Trump's protectionist trade policies. As a result, (agricultural) market prices in the United States were under heavy pressure.

Max $250.000 for dairy farmers
To compensate, the US government has released a total of $16 billion† Dairy farmers will receive compensation of $0,20 per hundredweight of milk (50,8 kilos), based on historical production figures. For the larger companies, the amount is limited to a maximum of $250.000. 

Grain and pig farmers can expect benefits of up to $500.000 per company. Pig farmers receive an amount of $11 per pig. Compensation for grain growers is between $15 and $150 per acre, depending on the state in which they live.

Compensation too low
The damage amounts are paid over 3 installments. Farmers can expect the first payment in August. There are, however, a number of conditions. For example, gross income (in 2015, 2016 and 2017) may not exceed $900.000 and business income must be at least 75% dependent on agricultural activities. Entrepreneurs who have recently retired are not eligible for the compensation. 

Advocates in the dairy say that the compensation is a welcome concession, but that the amount is disproportionate to the damage suffered. That is why they are urging the United States Department of Agriculture (USDA) to quickly end the trade war by signing new treaties.

Buy up stocks
In addition to providing income support to farmers, Trump is also buying up supplies in order to pull market prices out of the doldrums. These products are donated to American school canteens and food banks. He is allocating an amount of almost $1,4 billion for this. More than $200 million of this is spent on buying pork and nearly $70 million is spent on dairy commodities. The purchase program will start from October.

Wouter Job

Wouter Baan is Head of Meat & Dairy at BoerenbusinessAt DCA Market Intelligence, he focuses on dairy, pork, and meat markets. He also monitors (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.