US president Donald Trump today announced $12bn of aid payments to farmers to help offset the financial burdens of high-cost inputs and low crop prices.
Trump today during a roundtable meeting at the White House said that he will leverage revenues collected from tariffs to secure $12bn worth of funding for farm assistance. Of the full aid package, $11bn will be used for the farmer bridge assistance (FBA) program, which provides broad relief to growers of corn, soybeans, wheat and other crops and grains, according to the US Department of Agriculture (USDA).
Farmers who qualify for the FBA program can expect to receive payments by 28 February, with commodity-specific rates expected to be released by the end of this month.
The remaining $1bn of bridge payments are reserved for commodities not covered under the FBA program such as specialty crops and sugar, according to the USDA. But details and a timeline of these payments were not immediately released.
After the White House meeting, the USDA clarified that the $12bn in funds would be authorized under the Commodity Credit Corporation Charter (CCC) Act and administered by the Farm Service Agency. How funds authorized by the CCC are tied to tariff revenue was not immediately clear.
The Argus NPK fertilizer affordability index has recovered from its lows earlier in the year, but remains at around 0.89 on 4 December, indicating lower crop prices relative to input costs. Front-month CBOT corn prices have increased by about 20¢/bushel since 1 October to $4.36/bushel on 8 December, while granular urea prices at Nola have declined by $46/st on a midpoint basis to $355.50/st fob Nola over the same period, according to Argus data.
Market participants expect most of the aid to go toward paying down debt farmers have accumulated while operating on thin margins in recent years. The removal of fertilizer tariffs drove significant declines in phosphate, urea, and UAN prices, slightly easing input costs for growers. USDA expects 95mn acres of corn to be planted next year, so clearing debt could open the door for more borrowing and spring spending, depending on when these payouts arrive.
The push to bolster domestic production to reduce reliance on fertilizer imports remains a key effort by the Trump administration to improve farmer profitability. Trump said he would even impose "very severe tariffs" on Canada if it was necessary to expand US production, but that would be a departure from administration trade policy that has so far exempted Canadian fertilizer imports, especially potash, from tariffs.
Trump said he is willing to use tariff revenue again should farmers find they need additional relief.
Calls for farmer aid have come from the Trump administration since as early as September this year, but were stalled by the partial shutdown of the US government and questions about how aid could be funded.
