By Josh Zumbrun 

WASHINGTON -- The Trump administration rolled out a $16 billion aid package for the U.S. farm sector, which primarily will take the form of direct payments to farmers to offset losses resulting from the trade conflict with China.

The administration moved to shore up American agriculture Thursday after a breakdown in talks earlier this month between Washington and Beijing. Amid expectations that American farmers will be hindered selling crops to China's 1.4 billion-person market, commodity prices sank to their lowest level in more than 10 years.

President Trump directed the U.S. Department of Agriculture to create the program "because he knew farmers would bear the brunt of this lack of trade deal with China once again," said Agriculture Secretary Sonny Perdue. "Farmers themselves will tell you they'd rather have trade than aid," he said, but in the absence of a deal "they'll need some support."

The program is a reprise of a similar initiative in 2018 which had authorized $12 billion in funding. In first tweeting the idea of a farm-aid package this year, Mr. Trump had proposed a program to use tariff revenue to buy crops and distribute them internationally for humanitarian purposes. The USDA program won't use tariff revenue directly, nor will it have an international humanitarian component.

The new program announced Thursday and the one last year consist primarily of direct payments to farmers.

In last year's program, farmers received a differing payment for different crops, but under this year's program the money will be distributed based on USDA's estimate of the amount of economic damage inflicted on different counties. The payment will differ county-by-county and will be based on the number of acres planted, not the specific crop.

In response to the U.S. imposing 25% tariffs on roughly $250 billion of Chinese imports over the past year, Beijing has slapped tariffs on agricultural products, and state-controlled companies in China largely halted buying U.S. farm goods.

The result has been climbing commodity prices for other parts of the world -- Brazil in particular has capitalized by selling soybeans to China -- but plunging prices in the U.S. market. The S&P GSCI Agricultural Commodities hit its lowest level last week in more than 10 years.

Soybeans are the biggest crop export to China. Before the conflict, the U.S. shipped $10 billion to $12 billion a year of soybeans to China; over the past year, that has fallen to about $2 billion.

Write to Josh Zumbrun at Josh.Zumbrun@wsj.com

(END) Dow Jones Newswires

May 23, 2019 12:53 ET (16:53 GMT)