By JACK WEATHERLY
Willard Jacks, Mississippi representative on the American Soybean Association board, said in June regarding the looming Chinese tariff that “we’ve got a couple of months to get this resolved.”
While the two countries have not resolved the issue, the United States has come up with a stopgap measure.
That was announced Monday, about two months later.
U.S. Agriculture Secretary Sonny Perdue said the Commodity Credit Corp. will make available $3.6 billion for soybeans plus $1.1 billion for other row crops and for dairies and pigs.
The total of $4.7 billion is for 50 percent of the value of the commodities.
If the 25 percent Chinese tariff is not lifted between Sept. 4 and December, there is the possibility of the second round of payments for the other half, said Jacks, who is chairman of the board of Silent Shade Planting in Belzoni.
There is a limit of $900,000 in adjusted gross income for a maximum of $125,000 in crops payments Jacks said.
Likewise there will be a cap of $125,000 in payments for pigs and dairy operations. Pork producers can expect $8 a head, Maples said. “We send a lot of pork to China, and so it’s an industry that’s felt the pressure.”
Jacks said. “I really hope they don’t have to make the second payment [in December]. They’re hoping to get the tariff war done.”
The tariff placed on U.S. commodities starting July 6 was in reaction to a 25 percent tariff imposed by the United States on March 1 on Chinese steel imports and a 10 percent add-on to aluminum products.
President Donald Trump said the U.S. tariff was because of an uneven playing field between the two super economies. The U.S. trade imbalance with China reached a record $375.2 billion in 2017, according to the Commerce Department.
Some farmers sold part of the crop on the futures market early in the year to protect themselves from the dropping price of soybeans because of the Chinese threat. Also, some farmers bought options.
“That plus this payment will make us whole and that’s fine till Christmas. But what are we going to do next year? When we go to the bank to borrow money, which most producers do, you have to have a [positive] cash flow,” Jacks said.
Dr. Josh Maples, assistant professor of agricultural economics at Mississippi State University, said the row crop cap will come into play with producers who farm about 3,000 acres.
Had it not been for the payments, “farmers would definitely be hurting. Farmers are already hurting,” Maples said. “What we’ve seen in the soybean market is a 20 percent erosion in price” because of the Chinese threat.
From Sept. 4 till Jan. 15, applications for the payments will be online at www.farmers.gov/MFP, or from the local Farm Service Agency office.
Soybeans are the biggest row crop in Mississippi. In 2017, it was valued at $1.7 billion. Mississippi exports about a third of that to China.
“We’re expecting a really big soybean crop, so that plays a hand in this, too,” by driving down the market price, Maples said.
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