The White House made the politically correct decision Monday afternoon when Agriculture Secretary Sonny Perdue was told he could distribute the second of two planned payments to farmers stung by the trade war with China.
Early in the summer, when the soybean market dropped by $2 per bushel from the loss of the $12 billion Chinese soybean market, the Trump administration quickly planned a two-step payment to farmers to compensate a portion of their financial loss from the trade conflict.
The initial payment was made in July, representing half of what had been calculated as the market loss for soybeans, corn, wheat, sorghum, pork, cherries and almonds. The biggest beneficiary of the program was the soybean grower who would be paid $1.65 per bushel on his 2018 production. That represented about 75 percent of his loss.
The corn grower was only going to get one cent per bushel for his 2018 production, and the National Corn Growers Association has been chaffed over the issue, contending the loss of ethanol and distillers dried grains to China represented 44 cents per bushel that should have been paid to corn growers.
The White House Office of Management and Budget did not agree with the National Corn Growers and has declined to move away from the penny per bushel. Then the Office of Management and Budget had balked at even approving the second payment to farmers, according to wire service reports. Such reluctance was based on President Trump’s contention that the Chinese would be buying “tremendous quantities of soybeans.”
On Thursday, grain traders reported that two Chinese state-owned grain companies, Sinograin and COFCO, had placed orders to purchase 41 million bushels of U.S. beans for $180 million. Because the Chinese government owns the companies there would be no tariff applied to the U.S. beans upon arrival in China, unlike the soybeans that independent soybean processing companies would have to pay.
The U.S. grain trade was not enthused about the 41 million bushel sale, and the market actually lost four cents on Thursday. Compared to the 1.1 billion bushels of soybeans that China bought from the United States last year, the grain traders could not define the 41 million bushels as a “tremendous quantity.” Apparently, the Office of Management and Budget thought it was, and that China was on the verge of buying more and farmers did not need the second “trade aid” payment.
Whether it was the secretary of agriculture or some other White House advisor, someone got the attention of decision makers who realized that denial of the promised compensation to farmers would not be politically smart. And, as the White House political operatives like to say, promise made, promise kept.
If U.S. agriculture had been promised compensation for financial wounds suffered in the continuing trade war, and the battle-weary front-line soldiers were denied first aid, the White House would have lost its farmer army at the 2020 battle for votes.