With the phase one trade deal with China official, farmers are expecting more positive momentum in the markets. However, they shouldn’t expect an extension of the Market Facilitation Program (MFP) in the meantime, according to USDA Secretary Sonny Perdue.
“My expectation is that the president will direct when they fulfill that third tranche of the 2019 MFP payments,” Perdue said to AgDay Host Clinton Griffiths. “Now, I’ve told producers all along that they shouldn’t expect a 2020 MFP because they told us all along they’d rather have trade, not aid, and that’s what the president has delivered.”
For farmers, bankers and other stakeholders who’d bet on a 2020 payment, this might come as a surprise. With markets opening to China this week, and soon to Mexico and Canada, will the market respond fast enough?
“This takes effect in 30 days but the fact that China’s going to fulfill their $40 to $50 billion commitment they’ve got to begin very quickly,” Perdue says. “We’ll see demand among all sectors here, begin to build probably even in the next several days as we work out the technical permits and those kind of things that need to happen between economies in between traders.”
The deal with China makes way for $200 billion in total U.S. sales over the next two years, about $80 billion dedicated to agricultural products alone. In addition, USMCA passed in the Senate earlier this week and is just a couple steps away from being final.
“This is huge for American agriculture and our farmers and ranchers—essentially doubling the amount of products, U.S. products, that China has ever imported from our producers,” Perdue says.
Who’s the next big ag trade partner?
“Let me surprise you with this one,” Perdue says. “India… we’ve done frankly very little [with it] and we haven’t had the same trade relationships—there’s been a lot of barriers. I am hoping and I’m expecting that we can make some progress with India in agricultural products and trading relationships.”
The opportunity with India is massive and Perdue says he could see that trade relationship being as important as China over the next 20 years.
Perdue: 3rd MFP Payment Coming Soon, No New MFP for 2020