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Trump approves second round of trade aid payments for U.S. farmers

[December 18, 2018] By Doina Chiacu and Humeyra Pamuk

WASHINGTON (Reuters) - President Donald Trump on Monday said he authorized a second round of payments from an aid package of up to $12 billion designed to help farmers stung by the U.S. trade war with China, billing it as a promise kept to a key constituency.

"Today I am making good on my promise to defend our Farmers & Ranchers from unjustified trade retaliation by foreign nations," Trump said in a Twitter post.

"I have authorized Secretary Perdue to implement the 2nd round of Market Facilitation Payments," he said, referring to Agriculture Secretary Sonny Perdue.

The USDA in July authorized the aid program for farmers after China imposed a 25 percent tariff on American soybeans in retaliation for U.S. tariffs on Chinese goods. The agency had outlined the first round of payments in late August, and farmers were eagerly awaiting the second round.

An announcement on the second tranche had been expected in early December but was delayed by a tug of war on the issue between the USDA and the White House Office of Management and Budget, which questioned the need for the additional payments given growing expectations that China would resume buying U.S. agriculture products.

Farmers hailed Trump's decision to proceed with the payments. "They are a significant help as we continue to deal with low prices," said Kirk Leeds, chief executive of the Iowa Soybean Association. "It has been a tough year for U.S. soybean farmers."

The USDA expects direct payments to farmers under the program to total $9.567 billion, with around $7.3 billion for soybean farmers, the hardest hit from the trade war. The USDA program includes an additional $1.2 billion in food purchases, and around $200 million to develop foreign markets, bringing the total estimated aid to just below $11 billion.

Corn farmers have complained that the payments for their crop have been absurdly small at around a penny per bushel relative to soy, which is amounts to around $1.65 per bushel. But the USDA did not change the rate.

: "The estimated amount for MFP (Market Facilitation Program) we released today factors in a certain percentage of producers who won’t participate, payment and eligibility limitations of the program, and changes in actual production of commodities," USDA spokesman Tim Murtaugh said.

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President Donald Trump sits for an exclusive interview with Reuters journalists in the Oval Office at the White House in Washington, U.S. December 11, 2018. REUTERS/Jonathan Ernst/File Photo

CHINESE PURCHASES

Last week, Chinese buyers purchased 1.13 million tonnes of U.S. soybeans in the first deal since the trade war with Washington began in July. But traders and farmers said the amount was not large enough on its own to lift slumping prices.

The sales came after Trump and China's President Xi Jinping agreed to a 90-day detente in their tit-for-tat tariff war to negotiate a trade deal after meeting at the Group of 20 summit in Buenos Aires.

A day earlier, Trump told Reuters in an interview that China was buying "tremendous amounts of" soybeans. U.S. officials, however, have been unable to confirm further purchases or give clarity on when and how they might happen.

"The issue is what do we do in 2019?" said Leeds, of the Iowa Soybean Association. "We hope we get some resolution to the ongoing tariff battle. It's going to be tough because that window of opportunity is closing rapidly."

U.S. farmers fear they will not make major sales to China before Brazil harvests its next crop early next year.

China has been buying soy from Brazil instead of the United States during the trade war and typically buys from Brazil in the spring.

(Reporting by Doina Chiacu, Humeyra Pamuk and Tom Polansek in Chicago, Editing by David Alexander, Lisa Shumaker and Dan Grebler)

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