Dairy Industry Would Rather Resolve Trade than Receive Aid

In late July, U.S. Agriculture Secretary Sonny Perdue announced a $12 billion program to help farmers who are bearing the brunt of President Donald Trump’s trade tactics. Program sign-ups began Sept. 4.

The package includes a market facilitation program, a food purchase and distribution program of surplus commodities and a trade promotion program to provide private sector assistance to new markets.

When USDA released the details of the tariff aid package, some farmers were thrilled, while others were disappointed. Funds included in the Market Facilitation Program, which is the arm of the three-pronged program that results in direct payments, were not distributed equally. Instead, the rates were based on tariff impact. Still, some agriculture organizations say the payments are off-base and won’t help farmers in need.

DAIRY DISAPPOINTED

Unlike soybean and hog farmers, those who produce corn, wheat and dairy say the program leaves much to be desired. Dairy producers were disappointed by the trade aid payment rates which will amount to approximately 12¢ per cwt.

“Today’s announcement by the U.S. Department of Agriculture (USDA) on its tariff mitigation plan falls far short of addressing the losses dairy producers are experiencing due to trade retaliation resulting from the Trump administration’s imposition of steel and aluminum tariffs,” says Jim Mulhern president and CEO of the National Milk Producers Federation (NMPF). “The dairy-specific financial assistance package provided by USDA, centered on an estimated $127 million in direct payments, represents less than 10% of American dairy farmers’ losses caused by the retaliatory tariffs imposed by both Mexico and China.”

According to NMPF data, since the retaliatory tariffs were announced in late May, milk futures prices have lost over $1.2 billion through December 2018. In addition, milk prices for the balance of the year are now expected to be $1.10-per-cwt lower than what was estimated just prior to the imposition of the tariffs on U.S. dairy exports.

“A new study by Informa Economics on the impact of the retaliatory dairy tariffs projects dairy farmer income will take a hit of $1.5 billion this year if the tariffs remain in place through the end of 2018,” Mulhern says. “Although there may be a second direct aid package at the end of the year, dairy producers are greatly disappointed that the farmer aid portion of today’s trade relief package does not adequately address the harm done to dairy.

”Unfortunately, the bail out isn’t a long-term solution, according to Tom Vilsack, CEO of the U.S. Dairy Export Council.

“The dairy industry has faced a $1.8 billion loss over the last several weeks,” Vilsack says. “It’s a fairly significant challenge farmers face because of the tariffs.

TRADE WITH MEXICO IS CHANGING

One example is Mexico. For several years Mexico has been the No. 1 export market for U.S. cheese. The retaliatory tariffs put in place by Mexico are changing that trading dynamic.

“Our cheese used to be very, very financially advantageous to the Mexicans because of NAFTA,” Vilsack explains. “The retaliatory tariffs assessed by Mexico makes it less attractive for Mexicans to purchase cheese from the U.S. We still have a logistical advantage, but at the end of the day the tariffs have made it difficult to make the financial case.

”To make matters worse, the aid announced by USDA is not likely going to fix the problem, Vilsack says.

“The problem with the bail out is that it provides some additional help now, but it doesn’t necessarily guarantee that we’ll get markets back that we’ll lose over time as the result of these tariffs,” he says, adding farmers would rather have trade issues resolved than receive aid.

To access a downloadable checklist of which documents you’ll need to receive a payment, so you can visit your FSA office prepared, visit this Tariff Payment Checklist.

 
Comments