The Trump Administration has set out details of a $16bn aid package to support American agricultural producers – including farmers of extra-long staple cotton – hurt by trade tensions with China.
The assistance includes $14.5bn in direct payments to farmers through the Market Facilitation Program (MFP), a $1.4bn Food Purchase and Distribution Program (FPDP), and a $300m Agricultural Trade Promotion Program (ATP).
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Sign-ups for aid start from Monday 29 July and run until Friday 6 December, with the intention to begin making the first tranche of payments in mid-to-late August followed by the second and third tranches likely to be made in November and January. Payment is capped at $500,000 per person or entity.
The move has been welcomed by the National Cotton Council (NCC), whose chairman Mike Tate, an Alabama cotton producer, says the assistance is timely as US cotton’s economic health is deteriorating.
He notes cotton futures prices have fallen by 30 cents per pound since summer 2018 – equating to about $250 less revenue per acre for a producer with average yields.
“No doubt that this downward price pressure is due in large part to cotton sales to China being substantially below the level that was expected in absence of tariffs. On top of that, US cotton has lost market share in China to Brazil and Australia, and pressure is building in the distribution chain as US cotton exports lag and stocks build.”
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By GlobalDataTate says that over the course of the past year there have been significant cancellations and deferrals of US cotton sales to China (1.2m 480lb bales). And despite press reports of recent possible cotton purchases by China, the reported quantities are insufficient given the rising stocks and exportable supplies expected for the 2019 US cotton crop.
“We realise that President Trump is working to address long-standing market access barriers and structural concerns, but we encourage the Administration to look at all options to increase US cotton’s global competitiveness,” Tate says.
The US is the world’s third largest producer of cotton after India and China. Tate adds the allocation under the ATP to promote cotton and cotton manufactured products “will enable the NCC’s export promotions arm, Cotton Council International, to continue positioning US cotton as the “The Cotton the World Trusts” and expand international demand for US cotton fibre, yarn and other cotton products.”
The assistance follows a $12bn package last year to help farmers damaged by unjustified trade retaliation by foreign nations.
“China and other nations have not played by the rules for a long time, 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,” says US Secretary of Agriculture Sonny Perdue.
“Our team at USDA reflected on what worked well and gathered feedback on last year’s programme to make this one even stronger and more effective for farmers. Our farmers work hard, are the most productive in
