ACGF Chairman Says Low Commodity Prices from Trump Trade War Justify On-Farm Storage Payments to Farmers. A Trade War Is National Policy Requiring Mitigation for Lost Farm Income.

November 29, 2018
By Gale Lush

WILCOX, NE—November 29, 2018: “Trump’s trade war with China was initiated to protect intellectual property rights at the expense of farmers, who must export. When the farm sector of the National Economy is sacrificedfor the benefit of steel, aluminum and intellectual property rights economic mitigation is required,” says Gale Lush, a corn, soybean and wheat farmer from Wilcox, NE and Chairman of the American Corn Growers Foundation (ACGF). “The U. S. Department of Agriculture and the U.S. Congress should implement and expedite on-farm storage payments to farmers using USDA’s Commodity Credit Corporation. A Nov. 26, 2018 University of Illinois, Department of Agricultural and Consumer Economics report states, ‘The December corn futures contract closed lower for the third straight week on Friday. Weakness in soybean and oil markets continue to place bearish pressure on corn prices.” Lush added, “The current U.S.-instigated trade war is also signaling foreign competitor countries to expand acreage and exploit a weaker U.S. image with foreign buyers. Lost soybean demand from China has weakened soybean and oil markets, in turn placing downward pressure on the price of corn. While the new farm bill sits on hold farmers are being forced to store grain much longer because commercial storage is unavailable due to lost exports. The Trump trade war combined with ethanol waivers has caused these lost sales. The reduced farm income justifies on-farm storage payments to farmers.”

Lush said, “The Administration’s action, including the launching of this trade war, is a federal policy that has driven down corn, soybean and wheat prices and depressed farm income. That same federal government is now responsible to mitigate the economic damage it is imposing on farmers and rural America. The China trade war has weakened soybean and oil markets and that has driven down corn prices. That economic damage is not reflected in the CCC ‘tariff payments’ scheduled to be sent to corn farmers. Farmers are taking a big price hit on all their bushels, not just the lost bushels that would have been exported. The federal government should immediately establish a plan to pay farmers the commercial storage rate for all the corn, soybeans and wheat they will now have to store on their farms for extended periods of time due to lost export and ethanol markets.”

“$2.86 to $3.06 per bushel corn prices at grain elevators in the northern Great Plains on November 27 represent seriously low levels,” said Dan McGuire, ACGF Policy Director. “It’s clear that even with USDA’s latest 2018-19 strong corn export forecast at 2.450 billion bushels, feed and residual use at 5.5 billion bushels, corn use for ethanol at 5.650 billion bushels, corn prices will continue to struggle even after the trade dispute with China is resolved. USDA’s November 2018 supply and demand report still projects a price limiting 1.736 billion bushels of ending corn stocks on August 31, 2019. Making storage payments to farmers is justified given that commercial space is unavailable, largely due to foregone exports caused by the tariff trade war. That is forcing farmers to spend on new grain storage facilities, otherwise unnecessary without the trade war. Payment rates should be at least $.10 per bushel for the first month and $.05 per bushel per additional month. USDA should pay farmers at least $.35 cents per bushel for six months storage and $.70 per bushel for a year of corn storage.”

McGuire added, “Discretionary federal government interference in the corn, grain and oilseed markets has reduced farm income. The Administration made the decision to launch this trade war, so the federal government is responsible to offset that economic damage to farmers. According to the Energy Information Agency the U.S. has not exported any ethanol to China since March 2018, after the tariff trade war began. That means U.S. farmers are now storing that unsold corn. We’re playing catch up and need to export a higher level of monthly ethanol quantities now, but the earlier lost demand is gone forever. Inappropriate and questionable ethanol waivers provided to large petroleum companies by the Environmental Protection Agency in 2017 and 2018 caused serious damage. Even with the newly announced suspension of waivers, the corn demand loss in 2017 and 2018 seriously weakened corn utilization and farm income. It can only be replaced by a federal payment.”

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