USDA unveils $12bn in farmer aid to ease tariff impacts

The US Department of Agriculture (USDA) has set aside $12bn in aid to help US farmers offset the impact of tariffs.

The package is intended to provide farmers with financial relief to maintain operations, which could provide stable demand for fertilizers and other inputs for the 2019-2020 season.

Secretary of Agriculture Sonny Perdue announced the package today, detailing programs that will distribute direct payments to farmers.

Roll out of each program will not be immediate, and additional details for implementation are expected by the first week of September. Farmers that qualify for direct payment through the Market Facilitation Program will be required to provide production figures for the current crop after harvest wraps up in the fall.

The USDA said its Market Facilitation Program is intended for soybean, sorghum, corn, wheat, cotton, dairy and hog producers, and is geared to offset changes in production costs stemming from recent tariffs imposed on US agriculture. New crop November soybean contract prices have fallen by14pc since April, when China announced tariffs on US goods including soybeans.

"The main brunt of this, or the main investment, will be in those payments that are going to be made directly to the soybean, sorghum, corn, wheat, cotton, dairy and hog producers," USDA undersecretary for marketing and regulatory programs Greg Ibach said.

Perdue said the relief package is meant to provide President Donald Trump time to negotiate "long-term trade policy and deal to benefit agricultural as well as all sectors of the American economy."

Reaction to the USDA's announcement was mixed in the domestic agricultural markets, with soybean futures contracts rising by double-digits during the announcement. New crop November soybean prices rose by 10¢/bushel from today's open and closed at $8.73/bushel, up by about 11¢/bushel from yesterday's close.

American Farm Bureau Federation president Zippy Duvall said the relief measure will provide temporary assistance to farmers struggling financially, but it cannot replace trade deals.