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Don’t look now, but chances of a resolution with China on trade issues could be a long way off.

If President Trump planned to finalize an agreement with Chinese Premier Xi Jinping when they meet at a global summit conference in Japan later in June, the White House would not have quickly urged the U.S. Department of Agriculture to cobble a financial bailout program for financially stressed farmers since their Chinese market has evaporated.

And it was obvious the USDA scrambled to create the Market Facilitation Program payment for 2019 the way it developed. It may have been leaked to Bloomberg News Service on May 21 as a test, with plans to call farm groups to the White House on May 23 for the big announcement. But there was a lot of difference between the Bloomberg version and the White House announcement.

Apparently, some USDA policy economists burned the late-night candles to reduce some of the negative market impact and to avoid a complete alienation of the U.S. agribusiness industry. The first version would have had soybeans planted in every dry field this year, along with farmhouse gardens, back yards and roadsides. And with the need to rotate crops, all of that would be planted to corn next year and the farm economy would be totally out of balance. Thanks to the Bloomberg leak, that saved total embarrassment for the USDA and the administration.

The political need to announce a bailout program immediately was curious, because it came in the middle of planting, and the final product was ostensibly designed against impacting planting decisions of farmers. The best plan would have been rolled out after acreage, planted and unplanted due to flooding, had been finalized.

But farmers who are having difficulty calculating whether to plant late and suffer a low yield, or file a prevented planting crop insurance claim, now have the additional conundrum of being told any payment will depend on the crop they produce this year.

Those farmers who wanted to plant a crop, but are being pushed further back by the weather and muddy fields, could find themselves not only without a crop that would be eligible for a “trade aid” payment, but also too late to file a crop insurance claim.

However, the requirement to plant a crop for eligibility for the trade mitigation payment should please agribusiness. It ensures that every seed, fertilizer and crop input supplier will have as much business as possible. It ensures that every grain elevator and grain processor will have as much grain to handle and process as possible. And it ensures the U.S. grain trading industry has as much volume as possible to trade.

All those considerations, whether they turned out positive or negative, had to be included in the bailout program, since the White House knows a China trade agreement may be a long time away.

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Stu Ellis is an observer of the Central Illinois agriculture scene. In addition to his weekly column, you can view his “From The Farm” and “Harvest Heritage” reports on WCIA 3 News.

 

 

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