The Trump administration on Tuesday said it would provide up to $12 billion in aid for U.S. farmers from early September to shield them from the repercussions of trade disputes between the United States and China, the European Union and others.
The United States has never before offered aid of this scale for the impact of a trade dispute, said Scott Irwin, agricultural economist with the University of Illinois. Large, short-term assistance programs are typically offered during times of recession or low prices for agriculture commodities.
The government last offered farmers a comparable amount of emergency assistance starting in 1998 to address low hog, corn and soybean prices, according to Chad Hart, a professor of economics and crop markets specialist at Iowa State University.
Sonny Perdue, secretary of the U.S. Department of Agriculture, announced the government would use the Commodity Credit Corporation (CCC), established during the Great Depression nearly a century ago, to compensate farmers for an estimated $11 billion in losses due to the trade wars.
The aid is in addition to the dozens of assistance programs for farmers that are usually on offer, which include subsidized insurance, loans, disaster relief, training classes and trade promotion. In 2017, the federal government spent nearly $19 billion on agriculture support programs, and that total had been expected to rise to nearly $27 billion in 2018, Office of Management and Budget data showed before Tuesday’s announcement.
Following are details of the government’s plan and facts on the CCC:
The USDA said the $12 billion would be divided into three different programs, with more details available in coming weeks.
- Direct payments to farmers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs.
- Purchases of foods including fruits, nuts, rice, legumes, beef, pork and milk for distribution to food banks and nutrition programs.
- A trade promotion program to develop new markets.
The Commodity Credit Corporation has authority to make loans and direct payments to U.S. growers when prices for corn, soybeans, wheat and other agricultural goods are low.
The CCC’s charter allows it to aid farmers through loans, purchases, payments and other operations that include making materials and facilities available to produce and market agriculture commodities.
The CCC can borrow up to $30 billion at a time from the Treasury Department.
The U.S. Bipartisan Budget Act of 2018 lifted certain restrictions on the U.S. agriculture secretary’s authority to use CCC funds, causing Canada to ask the United States to explain the changes at the World Trade Organization.
The CCC allows the sale of agriculture commodities to other government agencies and foreign governments and the donation of food to domestic and foreign relief agencies. About $1.5 billion is appropriated annually for the USAID Office of Food for Peace program that provides to private organizations such as the United Nations World Food Program for use in emergency assistance programs.
The CCC was incorporated in 1933 and transferred to the USDA in 1939. It has no employees and is managed by a board of directors that is supervised by the USDA secretary acting as director and chairperson of the board.
In 2015, the CCC invested $100 million to develop biofuels infrastructure.
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