Congress just passed a new farm bill with bipartisan support to provide support to farmers as the trade war presses on. The $867-billion bill will provide subsidies to American farmers, legalizes hemp production, rejects stricter limits on food stamps, and makes changes to forest management practice.
One key component of the bill, the ‘buy American’ clause, requires American schools to purchase food products that are made substantially from American-grown commodities. There are two exceptions: if the product is not produced in the United States or is produced at a significantly higher cost.
The ‘buy American’ clause will play a beneficial role for a number of agriculture and seafood producers in the U.S. The clause is particularly beneficial to Alaskan pollack harvesters, who have faced increased competition from nearby Russian pollack fisheries. Russian farmers can significantly reduce production costs by completing a large portion of the processing in Asian countries with lower labor costs before sending it onward to the U.S.
This lower-cost alternative is particularly attractive for cash-strapped American schools who can save roughly a nickel per serving. The aforementioned clause will help these Alaskan farmers earn back market share from their Russian counterparts. The passage of the bill will also be beneficial for other domestic agriculture producers, such as dairy farmers, who have faced increased competition from foreign producers and have not had sufficient demand to meet their large surpluses.
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