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USDA releases details on trade damage estimate calculations

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U.S. Secretary of Agriculture Sonny Perdue announced that the USDA’s Office of the Chief Economist has published a detailed accounting of how estimated trade damage disruptions was calculated for its support package for farmers announced on July 25, 2019.

The Office of the Chief Economist developed an estimate of gross trade damages for commodities with assessed retaliatory tariffs by China, India, the European Union, and Turkey to set commodity payment rates and purchase levels. The USDA employed the same approach often used in adjudicating World Trade Organization trade dispute cases.

“Just as we did before, we want to be transparent about this process and how our economists arrived at the numbers they did. Our farmers and ranchers work hard to feed the United States and the world, and they need to know USDA was thorough, methodical, and as accurate as possible in making these estimates. We listened to feedback from farmers on last year’s programs and incorporated many of those suggestions into today’s programs. While no formula can be perfect in addressing concerns from all commodities, we did everything we could to accommodate everyone,” Perdue said.

“For a long time, China and other nations have not provided free, fair, and reciprocal access to U.S. farmers and ranchers and President Trump is the first President to stand up to them and send a clear message that the United States will no longer tolerate unfair trade practices,” he said. “Our support package ensures farmers will not stand alone in facing unjustified retaliatory tariffs while President Trump continues working to solidify better and stronger trade deals around the globe.”

The full description of the Trade Damage Estimation for the Market Facilitation Program and Food Purchase and Distribution Program is available on the website of the Office of the Chief Economist.

National Corn Growers Association President Lynn Chrisp said, “NCGA welcomes USDA’s transparency in this process. Corn farmers were understandably disappointed by the one cent per bushel for corn in the first MFP program and we appreciate that it appears USDA considered our recommendations in developing MFP 2.0. Amid farmers’ concern over crop conditions, trade disputes and tariffs, and demand destruction in the ethanol market, this program will not make any farmer whole.

NCGA analysis showed an average price loss for corn of 20 cents per bushel from May 2018 to April 2019. As trade talks with China lagged on in March and April of 2019, losses widened closer to 40 cents per bushel. Following Trump’s announcement that the Administration would be pursuing a second round of trade aid, NCGA advocated the Administration for improvements to MFP to make it more equitable and for a broader list of actions that would provide both short-term assistance and support market access for farmer

Any views or opinions expressed in this article are those of the author and do not reflect those of AGDAILY. Comments on this article reflect the sole opinions of their writers.
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