Will The USDA's $12 Billion Package Shield Farmers From A Trade War?

Jul 25, 2018

A $12 billion package will be implemented to aid the agriculture industry as a result of trade disputes.

The U.S. Department of Agriculture announced a $12 billion package is being implemented to shield the US agriculture industry from recent trade disputes.

Brandon Willis, a professor of applied economics at Utah State University and senior advisor to the former secretary of agriculture Tom Vilsack, says the $12 billion in a news headline might be shocking to some people, but farmers need a lot more to recover from the trade dispute.

“If you take a step back, it’s not going to do a lot for farmers,” Willis said. “But at the same time it’s probably all the USDA can do at this point and time.”

The Trump administration is working to keep the promise to farmers of creating a level playing field with the package according to Willis. Packages like this have been used before in other trade issues and natural disasters.

The $12 billion will be broken into a few different categories. One will go to farmers who grow commodities like soybeans, sorghum, corn, wheat, cotton, dairy and pork. Willis said a very small portion will actually go directly to the farmers. Purchases of foods for distribution will go to food banks and nutrition programs. Another portion will go to a trade promotion program to develop new markets.

“That’s really the pro is that there are a lot of people really struggling right now, financially really struggling who may or may not go out of business,” Willis said. “I think this kind of thing could be a lifesaver for them.”

Willis said the con is farmers would rather earn money from the market.

“This is like crashing a Lamborghini and getting $400,” Willis said. “It’s better than nothing, but it’s not what they could have got off the market. I think that’s the perspective that the public has to have is the farmers lost a lot more than they’re going to get. I think this is the best attempt the administration can make to help them out.”

The US agriculture sector is one bright spot in our trade deficit to China according to Willis. That’s where the Chinese government is going to hit the hardest. Willis said farmers are the people who are the most efficient at trade, and they’re the ones will get hurt the most.