A group of U.S. senators is urging Agriculture Secretary Sonny Perdue to ensure that a bailout program intended to help U.S. farmers weather President Trump’s trade war does not benefit foreign-owned companies.
The program, which buys surplus commodities from farmers and ranchers, was pitched as a way to protect farmers during the U.S.-China trade war. But the USDA hasn’t turned away foreign-owned corporations that want in. Earlier this year, taxpayer money was used to buy $5 million in pork products from a Brazilian-owned meatpacking firm. A Chinese-owned pork producer was slated to tap the program until the contract provoked intense criticism and was eventually canceled.
“It is unacceptable that American taxpayers have been subsidizing our competitors through trade assistance,” according to a letter addressed to Perdue and signed by Sen. Debbie Stabenow (Mich.) and eight other Democratic lawmakers. “We ask that you ensure these commodity purchases are carried out in a manner that most benefits the American farmer’s bottom line — not the business interests of foreign corporations.”
Under a $12 billion bailout program announced last year, the Trump administration set aside $1.2 billion to buy surplus products from farmers, including more than $500 million from pork producers. Last week, the White House announced a separate $16 billion bailout that included $1.4 billion in commodity purchase relief for farmers.
The letter’s signatories include Sens. Sherrod Brown (Ohio), Charles E. Schumer (N.Y.), Patrick J. Leahy (Vt.), Richard J. Blumenthal (Conn.), Patty Murray (Wash.), Amy Klobuchar (Minn.), Tammy Baldwin (Wis.) and Kirsten Gillibrand (N.Y.).
The senators pointed to what they called “lucrative” contracts that benefit foreign-owned entities and direct taxpayer money abroad. Those contracts include $62.5 million in pork products from JBS USA, which is owned by Brazil-based JBS SA. The food purchase program also was slated to buy $240,000 in pork products from Smithfield Foods, which is a subsidiary of Chinese-owned WH Group. Smithfield later asked that the contract be canceled after a political backlash. Sen. Charles E. Grassley (R-Iowa), a farmer and member of the Senate Agriculture Committee, was among those who expressed alarm that a foreign-owned company could benefit from the bailout. (The USDA said it has not tallied how much money has gone to foreign-owned companies, but the contracts themselves are public.)
“Whether it’s the WH Group, which is closely tied to the Chinese government, or JBS SA, which is benefiting from the U.S’s loss of market share in certain countries, it is counterproductive and contradictory for these companies to receive assistance paid for with U.S. taxpayer dollars intended to help American farmers struggling with this Administration’s trade policy,” the senators wrote.
Perdue says the program already buys only American-made products.
“JBS is a Brazilian company operating in the United States, buying product from U.S. farmers,” Perdue said in a statement. “What we do through these companies, it’s not helping the companies; they offer a bid to us based on buying U.S. farmers’ production. This helps U.S. farmers by supporting prices. Companies are able to buy from our farmers more because we are buying that product and taking it off the market.”
Dustin Baker, director of economics for the National Pork Producers Council, cautioned against limiting which pork processors could take advantage of the food purchasing program. Baker said that reducing the number of producers trying to get relief would only drive up the cost of delivering the products to food banks and needy families.
Plus, Baker said, just because some processors are foreign-owned doesn’t mean they can’t be “the lifeblood of the economies in which they’re located.” Many of these companies provide thousands of jobs in rural areas and, like their American-owned competitors, they must also comply with USDA guidelines, he said.
“The real purpose [of the program] is to take product off the domestic market that otherwise would have been exported,” Baker said. “By preventing companies from joining, all you’re doing is increasing the cost of delivering that product to those who need it the most.”
In January, Rep. Rosa L. DeLauro (D-Conn.) said she would introduce the Buy American Agriculture Act, which would require the Agricultural Marketing Service to buy food products only from American companies. The legislation would also push for added transparency by requiring the agency to disclose why companies were awarded contracts.
“We were led to believe this program would assist producers impacted by low crop prices, not line the pockets of foreign companies who already report millions of dollars in annual profits,” DeLauro said in a statement at the time. “The Buy American Agriculture Act would close that loophole and ensure that money spent by USDA on food purchases rightly prioritizes America’s farmers and American businesses.”