WASHINGTON, D.C., U.S. — U.S. Secretary of Agriculture Sonny Perdue on Aug. 27 announced details of actions the U.S. Department of Agriculture will take to assist farmers adversely affected by ongoing trade disputes, particularly with China. As announced last month, the Trump administration indicated the USDA will provide up to $12 billion in such assistance.
“Early on, the president instructed me, as Secretary of Agriculture, to make sure our farmers did not bear the brunt of unfair retaliatory tariffs,” Perdue said. “After careful analysis by our team at USDA, we have formulated our strategy to mitigate the trade damages sustained by our farmers. Our farmers work hard, and are the most productive in the world, and we aim to protect them.”
The assistance will be provided through three USDA initiatives. The USDA’s Farm Service Agency will administer a Market Facilitation Program that will provide direct payments to producers of corn, cotton, dairy, hogs, sorghum, soybeans and wheat with sign-up for such payments to begin Sept. 4. The USDA’s Agricultural Marketing Service will administer a Food Purchase and Distribution program to purchase up to $1.2 billion in commodities that have been targeted by China and other nations for retaliation in response to U.S. trade actions. And through the Foreign Agricultural Service’s Trade Promotion Program, $200 million will be made available to help develop other foreign markets for U.S. agricultural products.
The USDA indicated for each commodity covered under the Market Facilitation Program, the payment rate will depend on the severity of the trade disruption and the period of adjustment to new trade patterns, based on each producer’s actual production. In the case of soybeans, the initial payment rate was set at $1.65 a bushel. The wheat initial payment rate was set at 14¢ a bushel.
Interested producers may apply after their harvest is 100% completed and they can report their total 2018 production.
Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income for tax years 2014, 2015, and 2016 of less than $900,000. The first payment period begins Sept. 4. The second payment period, if warranted, will be determined by the USDA.
The initial MFP payment will be calculated by multiplying 50% of the producer’s total 2018 actual production by the applicable MFP rate. The USDA forecast initial payments under MFP at $4.7 billion with $3.6 billion of the total allocated to soybean producers. Pork producers may receive up to $290 million in payments, and wheat producers may receive up to $119 million. If the USDA’s Commodity Credit Corp. announces a second MFP payment period, the remaining 50% of the producer’s total 2018 actual production will be subject to the second MFP payment rate.
The USDA indicated MFP payments will be capped per person or legal entity at a combined $125,000 for dairy production or hogs. Payment for dairy production is based off the historical production reported for the Margin Protection Program for Dairy. For existing dairy operations, the production history is established using the highest annual milk production marketed during the full calendar years of 2011, 2012, and 2013. Dairy operations also are required to have been in operation on June 1, 2018, to be eligible for payments. Payment for hog operations will be based off the total number of head of live hogs owned on Aug. 1, 2018.
The USDA noted MFP payments are also capped per person or legal entity at a combined $125,000 for corn, cotton, sorghum, soybeans and wheat.
The amounts of commodities to be purchased under the Food Purchase and Distribution Program will be based on an economic analysis of the damage caused by trade dispute-related tariffs. Their estimated damages will be adjusted based on several factors and spread over several months in response to orders placed by states participating in the USDA’s Food Nutrition Service nutrition assistance programs.
The AMS will buy affected products in four phases. The materials purchased may be adjusted between phases to accommodate changes due to growing conditions, product availability, market conditions, trade negotiation status, and program capacity.
The commodities purchased will be used in nutrition programs such as the National School Lunch Program, The Emergency Food Assistance program (TEFAP) and other nutrition assistance programs.
The USDA indicated the AMS has coordinated with the Office of the Chief Economist, FNS, industry, and other agency partners to determine necessary logistics for the purchase and distribution of each commodity, including trucking, inspection and audit requirements, and agency staffing.
The Agricultural Trade Promotion Program will provide cost-share assistance to eligible U.S. organizations for activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research, and technical assistance. Applications for the ATP will be accepted until Nov. 2, 2018, or until funding is exhausted. Funding should be allocated to eligible participants in early 2019. The ATP is meant to help all sectors of U.S. agriculture, including fish and forest product producers, mainly through partnerships with non-profit national and regional organizations.