Farmers Say They Need Trade Mitigation Payments Again
The House Agriculture subcommittee that covers trade asked farmers to tell them how trade is affecting their businesses. They said they are not following President Donald Trump's advice to buy bigger tractors to fill the orders China has promised to make. Rep. Jim Costa, D-Calif., chairman of the subcommittee, quoted Trump's comment about tractors in his opening statement, and said he's skeptical about the phase one deal with China, especially given that the coronavirus outbreak is going to affect China's market demand. He also said he'd heard about American poultry stuck in port because there was no one to move it due to quarantines.
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Robb Ewoldt, a board member of the Iowa Soybean Association, said that farm equipment dealers in his part of Iowa are suffering, because no one's buying. He said John Deere's headquarters is across the river in Moline, Ill., and they're experiencing layoffs. He said another tractor company in Waterloo, Iowa, is laying off, too.
Ewoldt gave emotional testimony about how the trade war and Mississippi River flooding affected his raising of cattle and hogs and growing of corn, soybeans and alfalfa hay. Ewoldt, who rents all the acreage he farms, said his operation had $100,000 less income in 2018 than it had in 2017, and if it weren't for trade mitigation payments, he would no longer be farming at all. Ewoldt said he is driving a truck on overnight trips to St. Paul, Minn., and St. Louis to make ends meet.
“Maybe I’m a better truck driver than a farmer, I’m making money at that,” he said ruefully. In response to a question from Rep. Abby Finkenauer, D-Iowa, on whether other farmers are taking off-farm jobs, he said one of his friends is marshaling planes.
Nationwide, more than 60% of soybeans are exported, Ewoldt noted, and he said they'd been very dependent on China. He said he doesn't expect that market to recover until swine flu abates there, though he said soybean farmers are working on expanding exports into Pakistan and Bangladesh, as India is consuming all the soybeans it grows now, and no longer exporting to its neighbors.
Matt Huie, a Texas farmer of sorghum, cotton, corn, wheat and cattle, said the prices for cotton have fallen from about 90 cents a bale to 60 cents, both because global demand is down and because of retaliatory tariffs on American cotton. China's punishment of sorghum meant “a billion-dollar market that simply vanished,” he said. China is buying sorghum again, but at much lower prices than before the trade war, he said.
Huie said farmers need another round of trade mitigation payments, called the Market Facilitation Program, or MFP.
The Agriculture secretary has said that's not planned, but Trump says they could come again this year if purchases aren't ramping up fast enough from China and from the U.S.-Mexico-Canada Agreement.
Huie said the cotton mitigation payments made up for 39% of the lost income from falling prices.
“I know the MFP was designed to be temporary. The president’s pledge to producers to continue to provide aid until the trade deals work as promised is viewed as a lifeline,” he said. “I do not see a clear and certain turnaround. This committee has always stood by farmers and ranchers in these critical periods.”
He said his farm got large payments, and they still only made up half of what they lost. “If I had a good exit strategy right now, I’d be taking it,” he said.
The billions the administration has spent compensating farmers for lost business dwarfs the auto industry bailout in the Great Recession.
Brian Keavy, vice president of international sales for Kingsburg Orchards, told the committee that even though the orchard only exports 10% of its crop -- it sells $800 million a year in stone fruit -- the exports account for 20% to 40% of sales revenue, because they sell at a premium. China only accepts plums, but since retaliatory tariffs, shipments dropped sharply. He's glad that phase one achieved market access for nectarines, but estimates it will take three to four years to re-establish themselves in plums, as buyers replaced American plums with Spanish plums during the trade war, and because the tariffs are still in place. He said the orchard wants trade mitigation from the government to continue as long as the tariffs do. The government bought more fruit so that an excess of supply didn't drive down domestic prices.
Costa did not commit to pushing for another round of payments to make up for the trade war. “MFP payments need to be a lifeline, not a way of life, I think we all agree with that,” he said.