Agriculture Secretary Sonny Perdue Monday announced details of the trade assistance package for farmers hurt by the President’s trade agenda. The $12 billion package will provide payments to producers as part of a “short-term relief strategy” to protect agriculture. The Department of Agriculture’s Farm Service Agency will administer the Market Facilitation Program to provide payments to corn, cotton, dairy, hog, sorghum, soybean and wheat producers starting September 4th, 2018. It’s important to note that payments will be based on actual production. Producers must harvest a crop and provide their production numbers to USDA before payment can be sent. The payments to producers will total $4.7 billion. Also included in the relief package, USDA’s Agricultural Marketing Service will administer a Food Purchase and Distribution Program to purchase up to $1.2 billion in commodities targeted by “unjustified” retaliation. And, through the Foreign Agricultural Service’s Agricultural Trade Promotion Program, $200 million will be made available to develop foreign markets for U.S. agricultural products.
Payments include:
Soybeans – 1.65 per bushel for 50 percent of production
Corn – One cent per bushel for 50 percent of production
Pork – 50 percent of the total number of pigs on hand as of August 1, $8 per pig.
Cotton – Six cents per pound of 50 percent production.
Sorghum – 86 cents per bushel of 50 percent production
The margin protection historic number at 12 cents per hundredweight times that production number. USDA has a number for 21,000 producers but for&; those who don’t have it can be calculated by USDA.
Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income for tax years 2014, 2015, and 2016 of less than $900,000. Applicants must also comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations. On September 4, 2018, the first MFP payment periods will begin. The second payment period, if warranted, will be determined by the USDA.
The initial MFP payment will be calculated by multiplying 50 percent of the producer’s total 2018 actual production by the applicable MFP rate. If the Commodity Credit Corporation announces a second payment period, the remaining 50 percent of the producer’s total 2018 actual production will be subject to the second MFP payment rate. Payments are capped per person or legal entity at a combined $125,000 for dairy production or hogs. Payment for dairy production is based off the historical production reported for the Margin Protection Program for Dairy. Payment for hog operations will be based off the total number of head of live hogs owned on August 1, 2018.

An advisor on trade development priorities to the Canadian federal government says that, even with all the drama, the 25-year-old North American Free Trade Agreement needed to be updated. Dennis Laycraft, who is also the Executive Vice President of the Canadian Cattlemen’s Association, said the world has changed a lot since NAFTA was signed back in 1992. An admitted optimist, Laycraft says there has to be an agreement made between Canada and the United States. First of the two biggest sticking issues includes the continued presence of an independent, disputes-resolution panel. The other big sticker is the U.S. demand for a Sunset Clause, which would force a NAFTA re-negotiation every five years. But now it looks like some headway was made on that front over the weekend. Mexico’s incoming trade negotiator said, on Saturday, that the U.S. has backed off of its demand. Even so Laycraft said he expects to see Canada back at the table soon. The current bi-lateral U.S. – Mexico round was focused largely on wage and labor issues. And on those discussions, Laycraft believes Canada did not need to be present.

Werner Baumann, Bayer Chief Executive Officer, tried to soothe the frayed nerves of investors after a recent jury award of $289 million during a trial regarding glyphosate. Baumann says the merger between Bayer and Monsanto still makes sense in spite of the challenges ahead. Baumann told a German newspaper that there is “no reason to break out in nervousness” in the aftermath of the verdict on August 10th. In his first public comments since the decision, Baumann says, “The fact is that absolutely nothing has changed about the compelling logic of the Monsanto takeover, the potential value creation for our shareholders, the attractiveness of the agriculture market, and the goals we communicated.” The California court awarded damages to a school groundskeeper that claimed Roundup caused his non-Hodgkin’s lymphoma because of allegations the herbicide causes cancer. Bayer has said it will appeal. The verdict shocked case observers both inside and outside of Bayer in the first of what may amount to thousands of cases. While jury verdicts are typically either overturned or reduced, financial analysts say Bayer could still face as much as $5 billion in costs linked to cases involving glyphosate, the main ingredient in Roundup.

Soybeans were one of the first major casualties in the ever-escalating trade war between the U.S. and China. Russia is hoping to take advantage of the situation and cut deals with Chinese agribusinesses to make up for lost supply. The Washington Post says the Kremlin will offer roughly 2.5 million acres of arable land to foreign investors. Analysts are describing it as a bid to replace the U.S. as China’s most reliable soybean supplier. China is short on filling its soybean needs after the high stakes trade war got going with the U.S. through the summer. Beijing dramatically cut purchases of U.S. soybeans in response to the tariffs imposed on Chinese products by the Trump Administration. The Post article says Chinese officials are making plans to trim around seven million soybean tons off of the nearly 33 million tons it’s been buying annually from U.S. farms. Soybeans represent U.S. farmers’ single largest agricultural export to China, which takes approximately 60 percent of the world’s supply every year. Beijing’s cut in American purchases as sent U.S. bean future prices tumbling.

The trade war between China and the U.S. seems primed to worsen as the governments failed to make progress in two days of discussions. Reuters says the two sides met last week with low expectations of progress and there are no further talks scheduled at this time. A source close to the negotiations told Reuters that Chinese officials have raised the possibility of no further talks until after the U.S. elections in November. The lack of progress adds to uncertainty for businesses who now have to weigh the risks when considering investments in the U.S. or China. A new round of tariffs could take effect as soon as early September. There’s no guarantee they’ll be the last tariffs or that there won’t be other measures taken as well. The two countries engaged in talks for the first time since last June. U.S. officials were due to meet with delegations from the European Union and Japan to discuss joint efforts to confront China at the World Trade Organization over its industrial subsidies and conduct of its state-owned enterprises.