CP Editorial: USDA relief package may create long-term headache

From the District of Columbia to Columbia, Missouri, one of the most talked about agricultural news events is the current trade dispute with China.

According to CNBC, in April, China announced a 25 percent tariff on 106 American goods, including soybeans. Since then, retaliations have been escalating from both countries with no end in sight. It is clear the U.S. Department of Agriculture Relief Package being offered is only a temporary fix for a looming problem.

“There are definitely effects already,” said Patrick Westhoff, director of the Food and Agriculture Policy Research Institute (FAPRI) at the University of Missouri. “The expectation of reduced exports to China has reduced market prices, so that means farmers are getting less for crops harvested last year that they’ve marketed in recent months.”

What is our current administration doing to prevent further damages?

In response to this never-ending tit for tat, the United States Department of Agriculture (USDA) has announced the first round of payments, which is approximately $4.6 billion, in a $12 billion trade relief package. The United States has never released a relief package for trade on this scale. A USDA press release stated, “The Farm Service Agency will administer the Market Facilitation Program to provide payments to corn, cotton, dairy, hog, sorghum, soybean, and wheat producers.” Farmers will be able to apply for these payments through the USDA. But for many, these trade payments will come too late.

To me, it seems like the United States is trying to place a band-aid over a wound that it created. If this trade war keeps going in the same direction, then it is not over yet, which means that this gash in the American economy will keep growing larger and larger.

“While people can argue about the amount needed to offset losses in 2018, it seems clear to me that the current round of payments will not be enough to compensate people for the value of lost market sales over time,” Westhoff said.

Which country, China or the United States, can sustain the largest economic impact over time, without eventually falling off? For now, it seems that neither are blinking an eye. China is vying to be the top economy in the world. The United States is trying to shift the mountain that is world trade. As for United States agriculturalists, all we can do is buckle down and try to weather the storm ahead.