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WORLD | 06-08-2019 16:02

Trump hints at more trade aid for US farmers, as trade war with China drags on

With Beijing and Washington at odds, Argentine farmers are capturing larger shares of soybean sales to China, the largest export market for the oilseed.

US President Donald Trump said he’s prepared to deliver more aid to farmers hurt by the trade war with China, but concerns are growing that the US agriculture industry could suffer a long-term loss of market share as other countries rush in to fill Chinese orders.

The nation’s leading farm group said this week called China’s decision to halt imports of US agricultural products “a body blow” to the nation’s farmers, a crucial constituency for Trump.

The president responded with assurances of continued assistance to farmers in a tweet Tuesday morning, suggesting he would add to the US$28 billion in trade aid he has approved for farmers over the past two years.

“As they have learned in the last two years, our great American Farmers know that China will not be able to hurt them in that their President has stood with them and done what no other president would do,” Trump said in a tweet. “And I’ll do it again next year if necessary!”

Trump so far has maintained support among the rural voters who overwhelmingly backed his 2016 election with federal assistance partially making up for farmers’ losses from tariff dispute. But farmers and their lobbyists in Washington increasingly respond with demands for “trade not aid” as shifts in global trading patterns harden.

Brazil and Argentina are capturing larger shares of soybean sales to China, the largest export market for the oilseed. Farmers in Brazil are also investing to convert more land to soybean production to satisfy Chinese demand, raising the country’s long-term capacity to grow crops. Fertilizer Giant Yara International ASA forecasts Brazil’s soybean planted area will rise 2.5 percent this year as farmers shift pasture land and sugar-cane areas to the crop.

Archer-Daniels-Midland Co. Chief Executive Officer Juan Luciano said on an August 1 conference call with analysts that the damage to US agriculture grows the longer the tariff dispute continues, though he doesn’t think it has yet done irreparable harm.

“People find alternatives and eventually they become a little bit more comfortable with those alternatives,” Luciano said. “So this is not good for the US farmers.”

‘Cannot last forever’

Zippy Duvall, president of the the American Farm Bureau Federation, the nation’s largest and most influential general farm organisation, said Monday US farmers are “grateful” for the money the Trump administration has given them so far but “we know that aid cannot last forever.”

He said China’s import cut-off was “a body blow to thousands of farmers and ranchers who are already struggling to get by.”

Roger Johnson, president of the National Farmers Union, the nation’s second-largest general farm group, said Trump’s “strategy of constant escalation and antagonism” has “just made things worse.” US family farmers and ranchers “can’t withstand this kind of pressure much longer.”

Duvall said the tariff war is worsening the plight of a farm sector already reeling from low commodity prices and bad weather. USfarm exports to China had already fallen US$1.3 billion during the first half of the year, he said.

“Now, we stand to lose all of what was a $9.1 billion market in 2018, which was down sharply from the US$19.5 billion farmers exported to China in 2017,” Duvall said.

Trade aid

Last year, the administration announced US$12 billion in aid to farmers hurt by the spat. Trump followed that up with another US$16 billion in trade assistance this year.

Prior to Trump’s tweet, US Agriculture Secretary Sonny Perdue had warned farmers not to count on more trade aid. Agriculture Department spokeswomen didn’t immediately respond to requests for comment on Trump’s tweet.

Trump won overwhelming backing from rural voters in 2016 and their continued enthusiastic support is crucial to his re-election bid. In June, 54 percent of rural voters approved of Trump’s job performance compared with a national approval rating of 42 percent, according to a Gallup survey of 701 self-identified rural voters.

Farmers optimism rebounded in July, after the latest tranche of trade aid was announced and before the escalation in the trade war. The Purdue University/CME Group’s agricultural sentiment index increased to 153 points in July from 126 in June, according to a survey of 400 agricultural producers.

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