Trade Disputes Heat Up, USDA to the Rescue?

By David Widmar and Brent Gloy

Ongoing trade disputes have put a damper on commodity markets and have again strained farm budgets.  Against this backdrop, the Secretary of Agriculture has been consistently telling farmers that USDA is prepared to support them as the trade dispute plays out (for example, 1, 2, 3).  While these plans have been kept a secret – apparently to prevent other countries from knowing the details – angst has begun to brew about what might be in store as the Chinese prepare to implement a 25% tariff on soybeans imported from the U.S.

The challenges with the government stepping in to backstop U.S. farmers from trade fallout was perhaps best summed up by the Chairman’s of the Senate Ag Committee, Pat Roberts:

“I’m just saying I don’t know how we implement this, I don’t know what kind of cockamamie scheme that we could come up with that would be fair, that would be at least somewhat responsible.”

All of this has us curious about what sort of plan might be in the works. In short, we have no idea of the specifics. However, we thought we thought it might be helpful to think about different types of government support and how they might fit into today’s situation. (more…)