Government Helps Subsidize Trade War Farming Losses

A year ago this week America began its trade war with China, and it’s the agriculture industry that may be feeling the hardest punch ever since.

The government has vowed to help subsidize what agriculture is losing due to the tariffs with the implementation of the Market Facilitation Program. So far soybean farmers have gotten the biggest hand up.

“The soybean farmers were just very pleased,” says Paul Gross, field educator with MSU Extension. “In a time when there was a challenging year and low commodity prices.”

Prices for soybeans have plummeted since the U.S. began a trade war with China a year ago. The U.S. taxed Chinese goods, so China responded by refusing to buy American soybeans.

“Automatically we thought there was going to be a price deterioration,” says farmer Rich Recker. “Where the prices were going to go down.”

The tariffs against China, and then the reciprocation of them from pulling out of the US soybean market, caused the price of soybeans to drop $2 a bushel. This Market Facilitation Program will pay about $1.60 a bushel to those growers.

They are not breaking even, they are not making money, but they are at least getting something to cushion the blow and move forward into the next year.

“It’s not a welfare program,” says Recker. “It’s just to help make up the difference of price of the prices that are traded in the world.”

Soybeans were hit the hardest, but the impact is felt throughout agriculture. Prices have climbed in every aspect of farming, but soybeans got 90% of the relief in the first round of funding.

“There’s other commodities that really felt left out because they were still impacted in certain ways by trade,” Gross says.

A second round of funding is coming this fall. It’s expected to be nearly twice as large and be split more evenly. Beyond that, little is known. Especially if the trade war continues.

“They are going to be happy that they got it this year,” Gross says. “But I don’t think there’s an expectation that it will continue.”