U.S. food buys offer little relief from trade war

The majority of the food purchased through the USDA’s trade mitigation plan is destined for food banks and pantries, through the Emergency Food Assistance Program. Some food may also be made available to The National School Lunch Program, the Commodity Supplemental Food Program, which primarily delivers food to elderly Americans and the Food Distribution Program on Indian Reservations, according to the USDA.

But companies are not as eager to sell their products to these programs.

An analysis by the Midwest Center for Investigative Reporting of the $137.5 million worth of food bids awarded as of February 5 found that 17 percent of food orders remain unfilled.

According to the USDA, producers are awarded contracts based on lowest price and the producer’s ability to fulfill the order.

The Midwest Center analysis found:

• 39 percent of the open trade mitigation bids had only one bidder
• Of the nearly 6,000 food orders, more than 350 accepted bids were on more expensive bids, totally more than $1 million in additional spending
• Of the 59 USDA-approved meat vendors, only 16 have bid on trade mitigation orders
• 1,015 orders went unfulfilled – either because bidders had already sold their products or others simply did not bid.

The USDA said it’ll continue requesting bids throughout the year.

“USDA plans to purchase everything it has announced,” said a USDA spokesman via email.

Ted Schroeder, an agriculture economist at Kansas State University, said companies would rather sell their products to grocery stores and restaurants.

“The government opportunity, it’s going to be a little more costly to dive into,” he said. “My guess is, that would be a last resort to dump product I wasn’t otherwise moving.”

While these unawarded bids represent a small percent of all the food the USDA says it plans to purchase, this program was intended as a temporary relief for farmers who have been shouldering the financial burden of the president’s trade disputes since April, 2018.

“It’s important to note all of this could go away tomorrow, if China and the other nations simply correct their behavior,” said Perdue in a press release nearly six months ago announcing the purchase program. “But in the meantime, the programs we are announcing today buys time for the President to strike long-lasting trade deals to benefit our entire economy.”

Schroeder said that even if the Trump administration works out a deal with China tomorrow and tariffs are lifted, the damage to commodity markets will have a lasting impact.

He pointed to the “mad cow” scare in 2003, which saw foreign markets close off to U.S. beef amid concerns about mad cow disease. China imposed a 14-year ban on American beef.

“Just that one event disrupted, closed markets. It took us 10 years, and we’re still not fully rebuilt in some of these countries,” he said. “Once a country establishes a trade relationship with another country, it’s hard to win them back.”

This story was republished from the Midwest Center for Investigative Reporting, a nonprofit, online newsroom offering investigative and enterprise coverage of agribusiness, Big Ag and related issues through data analysis, visualizations, in-depth reports and interactive web tools. Visit it online at www.investigatemidwest.org