The Trump administration is considering payment rates around $2 per bu. for soybeans, 63 cents per bu. for wheat and 4 cents per bu. for corn growers as part of its second round of tariff aid payments for producers impacted by the trade war with China, Bloomberg said in a report citing two people familiar with the plan. This would be well above last year’s rates of $1.65 per bu. for soybeans, 14 cents per bu. for wheat and 1 cent per bu. for corn.
The sources say the basis of this year’s payments will be different than in 2018 when payments were based on farmers’ current production. The Bloomberg sources say the administration is considering basing payments on the acreage farmers plant this year and their historic yield of crops per acre. But the report emphasizes that this is all subject to change.
The report and a related tweet spurred a knee-jerk response from the soybean market as traders jumped to the assumption this would encourage farmers to plant more acres to soybeans to take advantage of the subsidy. It flies in the face of recent talk that payments would (should) be based on actual production history (APH) rather than 2019 plantings so as not to skew plantings and to enable quicker payouts.
USDA in an e-mailed statement in response to the Bloomberg report said that details on the new trade mitigation program would be coming “shortly” and it emphasized, “we want to be clear that the program is being designed to avoid skewing planting decisions one way or another.” Today’s tweet and the resulting market response underscores the urgency for USDA to share details as soon as possible.
The sources cited by Bloomberg say that current plans do call for some direct government food buys, as indicated by President Donald Trump’s initial tweet on the matter, but payments to farmers would again be the main element of the assistance package.