News trade war
Trump is arming farmers with billions
In a first round of financial measures to survive a global trade war, the US government is making $6 billion available to arable, pig and dairy farmers. That is half of the total available budget. In addition to support, the government will also buy products itself.
The US Department of Agriculture (USDA) announced Monday, August 27 that $6 billion will be made available immediately for the agricultural sector. It is a $4,7 billion emergency plan to compensate for the loss of farmers' income. They are affected by the trade war, which is raging mainly against China.
3,6
billion sek
In addition, the federal government will use $ 1,2 billion to buy agricultural products. These are products that are hit hard by countermeasures by the exporting countries. Finally, $200 million will be released to tap into new markets.
Soy hardest hit
American agriculture is mainly affected by Chinese measures and the lack of outlets for soybeans. Therefore, $3,6 billion is available for this sector. In addition, $290 million will go to the swine sector and $127 million to the dairy sector. Also available are $277 million for cotton, $156 million for sorghum, $119 million for wheat and $96 million for corn.
The relief plan goes into effect Tuesday, September 4, the day after Labor Day. In a statement, the USDA said it has up to $12 billion to support agriculture. This news was already announced at the end of July known, but details have not yet been released.
Introduce support in phases
"It was known in advance that the agricultural sector would be the first to be hit by the unjustly imposed tariffs," USDA Secretary Sonny Perdue said at a news conference. "In addition, there was great economic pressure on farmers, even without the tariffs. The support is being phased in so that we can take into account new developments, such as the deal with Mexico. More information about further support will become clear in the coming months."
Part of the money will come from the Commodity Credit Corp (CCC). This government organization was established in 1933, during the Great Depression. The CCC is authorized to support farmers with loans, or to take a product off the market, for example. They determine how much aid each individual company receives. This partly depends on the weight of the levy and how long it lasts.
Falling income
Not everyone qualifies for support. For example, entrepreneurs may have had a maximum gross income of $2014 between 2016 and 900.000. A maximum of $125.000 can be received per person or company. Average business income in the United States has fallen by 2013% since 50. This year it is expected to decrease by 6,7%. That is the lowest level in 12 years.
The USDA Marketing Service regulates the purchasing of commodities. This will be done in 4 tranches in the coming months, so that market movements can also be taken into account. It involves a wide palette (from pork and dairy to oranges and nuts). The levies from China affect exports the most. However, the European Union, Mexico and Canada have also imposed an import tax.
It is not surprising that Trump protects 'his' farmers. Agricultural exports to China amounted to nearly $2017 billion in 20, including $12 billion in soybeans, $1 billion in cotton and $600 million in pork. Large agricultural states such as Illinois, Iowa, Minnesota and Nebraska supported Trump in his appointment as president in 2016. The midterm elections will take place in November, which means support is desirable. Despite the news, the Chicago Board of Trade (CBoT) closed lower on Monday. The price level of soy is 17% lower than before the introduction of the Chinese import duties. Pork prices have now fallen by 30%.
NAFTA Negotiations
Meat prices rose 27% on Monday, August 5, following a trade deal Trump signed with Mexico. This deal makes the trade deal NAFTA unnecessary, the president said. The agreement was concluded without Canada. As a result, Mexico is expected to remove its duties on pork and cheese, among other things. Trump is now in talks with Canada, but threatens to impose tariffs if the country does not drop its 300% tariff on American dairy.
Niels van der Boom
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