South Dakota delegation asks for comprehensive trade aid for farmers and ranchers

WASHINGTON, D.C. — The South Dakota delegation urged U.S. Department of Agriculture Secretary Sonny Perdue to provide short-term economic relief to agriculture producers. The request comes as farmers and ranchers face heightened anxiety over the U.S. trade war with China.

In a letter to Perdue, the delegation wrote, “Producers are aware that China has taken advantage of U.S. innovation and technology far too long, and they are supportive of the Trump Administration’s efforts to strike a fair deal that increases market access for American agricultural products … however, until that goal is achieved we support the administration’s efforts to provide appropriate relief during this challenging agricultural economic climate.”

Agriculture Secretary Sonny Perdue testifies on Capitol Hill in Washington (AP Photo/Alex Brandon)

Despite $11 billion in relief payments provided by the federal government last year, the personal income of farmers declined by $11.8 billion through the first three months of 2019 alone. A recent survey in parts of 10 Plains and Western states shows rural bankers are rapidly losing confidence in the farm economy. Experts contribute this decline to the trade war.

This week, President Trump promised ranchers and farmers that the administration will provide about $15 billion to help ease losses from the dispute, and senators have been working with the administration to develop a relief package throughout the week.

The promise came after the president announced another round of tariffs on about $250 billion of Chinese goods. China retaliated with tariffs on $60 billion on American goods, causing stocks to plunge globally on Monday. The tariffs on American goods, which will take effect in June, are on batteries, spinach and coffee.

In its letter, the South Dakota delegation wrote that “South Dakota producers are resilient and have survived one of the harshest winters on record, followed by devastating spring flooding and now a delayed planting season. However, operating their farms with successive years of declining commodity prices and falling net farm income is critically jeopardizing the sustainability of their operations.”

The letter goes on to request that the U.S. Department of Agriculture work on providing relief that doesn’t just provide production-based assistance, but rather addresses trade-related losses across all commodities.

They argue that this will encourage farmers to plant crops based on what’s in demand in the current market, rather than ‘planting for the trade aid.’

The prior aid package that the Trump administration provided gave direct payments to producers of soybeans, corn cotton, sorghum, wheat, hogs, dairy, sweet cherries and almonds — the commodities most impacted by China’s trade retaliation.

Concerns have arisen that this type of aid prompts producers to plant soybeans and other commodities that may be in surplus from the trade war in order to get the aid.

You can read the full letter below.

“Dear Secretary Perdue,

Although a resolution to the trade dispute with China is our top priority, we write to express our support for equitable short-term economic relief for our agricultural producers.

Producers are aware that China has taken advantage of U.S. innovation and technology far too long, and they are supportive of the Trump Administration’s efforts to strike a fair deal that increases market access for American agricultural products. They prefer competitive unrestricted access to global markets in lieu of any short-term government assistance program; however, until that goal is achieved we support the administration’s efforts to provide appropriate relief during this challenging agricultural economic climate.

South Dakota producers are resilient and have survived one of the harshest winters on record, followed by devastating spring flooding and now a delayed planting season. However, operating their farms with successive years of declining commodity prices and falling net farm income is critically jeopardizing the sustainability of their operations.   Because the 2018 Market Facilitation Program (MFP) provided only production-based assistance, we ask you to consider the following changes to provide a more robust equitable safety net for the next iteration of MFP.

We request that any future MFP assistance does not incentivize non-market based planting decisions and we strongly encourage you to develop a program that fairly and equitably addresses producers’ trade-related losses across all commodities. We were encouraged to see Undersecretary Northey’s recent remarks encouraging farmers to “Plant for the market. Don’t plant for trade aid.”

Additionally, we encourage you to consider allocating 2019 crop-year assistance based on a producer’s 2018 planted and considered acreage of each eligible crop, and that each crop’s payment yield would be calculated based on the higher of the county average yield for the county in which the land is physically located or the producer’s Actual Production History (APH) in the crop insurance unit in which that crop was grown in 2018. We believe the 2018 crop acreage would be reflective of each crop’s acreage likely to be planted for the 2019 crop year and that calculating future MFP payments based on 2018 certified acreage and the higher of county average yield or APH would allow USDA to provide immediate assistance to producers.

Finally, when determining the MFP payment rate for individual commodities, we strongly encourage you to account for the substantial indirect effect retaliatory tariffs are having on all commodities and all producers. Though not all commodities have been retaliated against directly, the overall effect on the market has occurred across the entire agricultural sector in the form of depressed prices. Additionally, all farmers are negatively impacted by higher costs for inputs and equipment that have been caused by the trade dispute and tariffs.

We appreciate your steadfast attention to rural America, our farmers and ranchers, and your desire to expeditiously provide relief from trade inequities. We appreciate your prompt attention to this matter because rural America needs economic assistance as soon as possible.

Thank you for your efforts on behalf of U.S. agriculture.”