CNBC – Politics

Depression-era program could help farmers in trade war but still won’t make them ‘whole,’ says former USDA secretary

A Depression-era program could help farmers in the trade war with China, according to Dan Glickman, who served as agriculture secretary in the Clinton administration.

Glickman said other options also could be used within the agriculture agency but still won’t make farmers “whole.”

On Friday, China announced tariffs on $34 billion worth of American products, including soybeans, corn, wheat, beef, dairy products and sorghum.

Jeff Daniels        June 15, 2018

        Getty Images. Soybean farmers in Mississippi County, Arkansas.

Although President Donald Trump has offered to make it up to farmers in a trade war, there’s no way to fully cushion all the potential losses that producers could suffer if there’s a significant reduction in soybeans and other exports, according to a former agriculture secretary.

On Friday, China announced a 25 percent tariff on $34 billion worth of American products, including soybeans, corn, wheat, beef, dairy products and sorghum. It followed the White House earlier in the day announcing plans to impose tariffs on more than 800 Chinese imports worth approximately $34 billion.

Earlier this year, Trump spoke about escalating trade tensions with China and said his administration essentially had the backs of farmers and would “make it up to them” and that in the end they “will be better off than they ever were.”

Many of the farm products targeted by the Chinese are grown in states where Trump received strong support during the 2016 presidential election. The latest tariffs announced by Beijing are set to take effect July 6.

   Former Agriculture Secretary Dan Glickman.  Bill Clark | Roll Call | Getty Images

“This is very worrisome for American agriculture generally,” said Dan Glickman, who served during the Clinton administration as agriculture secretary. “The business model of agriculture is an export business model, particularly for the program crops such as wheat, corn, cotton, rice and especially soybeans.”

Glickman also said there could be fallout for GOP lawmakers from the Trump administration’s actions on trade. He said farmers and rural communities are likely to feel the pain if there is a significant decline in agricultural exports.

Even with trade tensions threatening American agricultural exports, some farmers remain steadfast in their support for Trump.

“President Trump and the administration have the best interests of America in mind,” said Joe Steinkamp, a soybean, corn and wheat grower near Evansville, Indiana. “They’re trying to do their best and say they’re going to take care of farmers — and we appreciate that.”

According to Glickman, there are several statutes available to the U.S. Department of Agriculture that could be used to help farmers, including programs through the Commodity Credit Corp. The CCC, a federal agency set up during the Great Depression, could potentially buy surplus farm products and support growers.

“This [CCC] is the part of the USDA that has almost unlimited amount of funds to sometimes make up the difference in farm prices,” said Glickman. “Sometimes they can buy commodities for school meal programs or for other hunger programs.”

Glickman, who now is executive director of the Aspen Institute’s Congressional Program, said other options available include purchasing programs tied to food humanitarian relief for famines and natural disasters that also are part of USDA.

Regardless, the former U.S. congressman and Clinton administration official said it’s “doubtful that farmers can be made ‘whole’ for all economic losses resulting from a trade war impacting American ag exports. It leaves farmers in an unstable, vulnerable position.”

Glickman said the trade war with China and other countries “involves great risk because, from a macro perspective, about 40 percent of American agricultural products are for export.”

Overall, U.S. agricultural exports to China represent almost $20 billion annually for American farmers.

The U.S. exports about $14 billion worth of soybeans to China, according to the USDA. China buys roughly half of the U.S. soybean exports, and roughly one in three rows of soybeans grown on the nation’s farms goes to the world’s second-largest economy, according to the American Soybean Association.

China also is the world’s largest cotton consumer and ranks as the second-largest buyer of American cotton, with one out of every five bales headed there.

The latest round of tariffs by Beijing follows retaliatory action taken in April by the Chinese against other agricultural products. Effective April 2, China imposed new tariffs of up to 25 percent on U.S. pork, nuts, wine and fresh fruit. The move was in response to the White House earlier announcing a 25 percent duty on steel imports and 10 percent on aluminum imports.

At the same time, Mexico this month announced retaliatory tariffs of 20 percent on U.S. pork exports in response to the Trump administration’s duties on imported steel and aluminum products. They also targeted apples and potatoes with 20 percent duties as well as tariffs of 20 to 25 percent on some dairy products and bourbon.

Earlier this year, Trump instructed U.S. Agriculture Secretary Sonny Perdue “to use his broad authority to implement a plan to protect our farmers and agricultural interests,” according to a statement issued in April. But little in the way of details have been offered of any specific plans.

“It’s not probably very smart in these kind of things to lay all your cards on the table about what you’re going to do,” Perdue told reporters in April.

Still, Glickman said he has “a lot of confidence in the current agriculture secretary, Perdue, that he’s going to use all of his authorities available to him. But there’s only so much he can do.”

Glickman said there’s also uncertainty out there for farmers when considering other tariffs U.S. trading partners can impose on U.S. agricultural products. “We’re most vulnerable in retaliation on agriculture, because that’s the one area where exports are more critically important than almost any segment of the American economy,” he said.

ThinkProgress

Enraged farmers and lawmakers confront Pruitt during Heartland tour

Rural workers slammed White House favoritism of fossil fuels.

E.A. Crunden     June 15, 2018

Ethanol Plant in Rosholt, South Dakota. Credit: Myloupe/UIG via Getty Images

Environmental Protection Agency (EPA) head Scott Pruitt is facing a torrent of accusations and anger as he tours through the U.S. heartland. Farmers and Midwestern politicians are accusing the official of prioritizing fossil fuel industries over the interests of the region, which has served as a reliable base for President Trump.

Touring through states including Kansas, Nebraska, and South Dakota this week, Pruitt came under fire repeatedly by constituents for reasons unrelated to his lengthy list of scandals. The subject of at least a dozen federal investigations relating to financial and ethics decisions, Pruitt encountered questions of a very different variety in the Midwest.

“To be honest, Administrator Pruitt, we’re mad as hell,” Kansas farmer Dennis McNich told Pruitt earlier this week. “Today, the American farmer is struggling to make ends meet and our industry is on the cusp of financial ruin in many areas of the country.”

Oil, gas, and coal have seen a favorable reception under the Trump administration, which has rolled back Obama-era initiatives and regulations in favor of fossil fuels. While those moves are in line with the president’s conservative base, farming states argue they’ve come at a cost.

At the center of that contention is ethanol, a crucial source of income for corn-producing states. Under the Renewable Fuel Standard (RFS), oil refiners are required to blend ethanol and biodiesel with petroleum, a requirement the corn industry welcomes and the oil industry has repeatedly lobbied against.

China hits U.S. farmers where it hurts after White House trade threats

Small refineries are sometimes granted waivers in order to avoid outsized costs under the RFS. But under Pruitt, the EPA has granted a number of controversial waivers, including one to Oklahoma billionaire Carl Icahn. That trend sparked a request from 13 Midwestern senators, including Chuck Grassley (R-IA) and Amy Klobuchar (D-MN), demanding that the EPA cease issuing such waivers.

That hasn’t happened and farmers are angry. “We ain’t going to be played for a sucker. And that’s what they’re trying to do,” Grassley told the New York Times this week.

His comments came after fellow Iowa Sen. Joni Ernst (R) called Pruitt “about as swampy as you get.” A number of other rural Republican lawmakers have similarly slammed Pruitt over seeming favoritism towards oil and gas over corn and agriculture.

“EPA Administrator Scott Pruitt is embarrassing President Trump,” reads one ad currently running in the region and backed by the conservative American Future Fund, which is based in Iowa and receives funding from at least one wealthy ethanol producer.

Iowa is not among the states on Pruitt’s agenda this week, but the administrator received an earful in the areas he did visit.

“My personal opinion is farmers are demanding accountability and I think that Mr. Pruitt probably is a dead man walking,” Dane Hicks, the GOP chairman for Anderson County, Kansas, told Politico.  “I can’t imagine he rebounds from this in any way to salvage his position. I would expect his resignation soon.”

Kansas Corn Growers Association President Ken McCauley had similarly harsh words. McCauley blasted Pruitt for coming to Kansas to “take a few photos with smiling farmers and tell the President that corn farmers are okay with his actions” rather than addressing the region’s needs.

“When you look at what EPA is doing, they are most definitely picking winners and losers and right now, ethanol is the loser,” McCauley said. He went on to add that the “EPA’s attacks on ethanol don’t just hurt plants like EKAE, they hurt farmers, rural communities, and American consumers who benefit from ethanol with lower prices and cleaner air.”

As trade war rhetoric grows, Appalachia and the Heartland fear backlash

Displeasure with Pruitt runs deep, but farmers aren’t completely satisfied with Trump either. Ongoing trade feuding between the Trump administration and a number of key trading partners, including Mexico, Canada, China, and the European Union, has sparked retaliatory tariffs predominately targeting the Midwest and the South. One particular source of contention is soybeans, a major export for the region. Responding to aggressive trade threats from Trump, China hit out at U.S. soybeans, threatening a 25 percent tariff and infuriating U.S. farmers in the process.

Trump has also failed to remove gasoline restrictions that limit ethanol amounts, despite promising farmers he would do so. Pruitt has said he supports lifting that restriction, but farmers have expressed frustration and skepticism.

“Agriculture is not very happy with Mr. Pruitt at this point,” said David Fremark, whose family grows and sells products including corn and soybeans in South Dakota.

“He’s done some good things, but this far and away overshadows everything he’s done,” Fremark said.

Pruitt’s visit to Nebraska on Thursday marked his final stop during the tour. It was not immediately clear to what extent the resounding criticism the administrator faced throughout the week would factor into future policy decisions or whether it would hinder his standing with the president.