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USDA announces details of assistance for farmers

By Staff | Sep 4, 2018

WASHINGTON D.C. (USDA)-U.S. Secretary of Agriculture Sonny Perdue announced Monday details of actions the USDA will take to assist farmers in response to trade damage from unjustified retaliation by foreign nations. President Donald J. Trump directed Secretary Perdue to craft a short-term relief strategy to protect agricultural producers while the Administration works on free, fair, and reciprocal trade deals to open more markets in the long run to help American farmers compete globally. As announced last month, USDA will authorize up to $12 billion in programs, consistent with our World Trade Organization obligations.

“Early on, the President instructed me, as Secretary of Agriculture, to make sure our farmers did not bear the brunt of unfair retaliatory tariffs. 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,” said Perdue.

These programs will assist agricultural producers to meet the costs of disrupted markets:

  • USDA’s Farm Service Agency (FSA) will administer the Market Facilitation Program (MFP) to provide payments to corn, cotton, dairy, hog, sorghum, soybean, and wheat producers starting September 4, 2018. An announcement about further payments will be made in the coming months, if warranted.
  • USDA’s Agricultural Marketing Service (AMS) will administer a Food Purchase and Distribution Program to purchase up to $1.2 billion in commodities unfairly targeted by unjustified retaliation. USDA’s Food and Nutrition Service (FNS) will distribute these commodities through nutrition assistance programs such as The Emergency Food Assistance Program (TEFAP) and child nutrition programs.
  • Through the Foreign Agricultural Service’s (FAS) Agricultural Trade Promotion Program (ATP), $200 million will be made available to develop foreign markets for U.S. agricultural products. The program will help U.S. agricultural exporters identify and access new markets and help mitigate the adverse effects of other countries’ restrictions.

“President Trump has been standing up to China and other nations, sending the clear message that the United States will no longer tolerate their unfair trade practices, which include non-tariff trade barriers and the theft of intellectual property. In short, the President has taken action to benefit all sectors of the American economy -including agriculture -in the long run,” said Perdue. “It’s important to note all of this could go away tomorrow, if China and the other nations simply correct their behavior. 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.”

Background on Market Facilitation Program:

MFP is established under the statutory authority of the Commodity Credit Corporation (CCC) and administered by FSA. For each commodity covered, the payment rate will be dependent upon the severity of the trade disruption and the period of adjustment to new trade patterns, based on each producer’s actual production.

Interested producers can apply after harvest is 100 percent complete and they can report their total 2018 production. Beginning September 4th of this year, MFP applications will be available online at www.farmers.gov/mfp. Producers will also be able to submit their MFP applications in person, by email, fax, or by mail.

Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income (AGI) for tax years 2014, 2015, and 2016 of less than $900,000. Applicants must also comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations. On September 4, 2018, the first MFP payment periods will begin. The second payment period, if warranted, will be determined by the USDA.

Market Facilitation Program

Corn will have an initial payment rate of $0.01 / bu. for an initial payment rate of $96,000; Pork will have an initial payment rate of $8.00 a head for a estimated initial payment of $290,300; soybeans will have an initial payment rate of $1.65 a bushel with a estimate initial payment of $3,629,700.

The initial MFP payment will be calculated by multiplying 50 percent of the producer’s total 2018 actual production by the applicable MFP rate. If CCC announces a second MFP payment period, the remaining 50 percent of the producer’s total 2018 actual production will be subject to the second MFP payment rate.

MFP payments are 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 (MPP-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 are also 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 August 1, 2018.

MFP payments are also capped per person or legal entity at a combined $125,000 for corn, cotton, sorghum, soybeans and wheat.

For more information on the MFP, visit www.farmers.gov/mfp or contact your local FSA office, which can be found at www.farmers.gov.

Background on Agricultural Trade Promotion Program:

The FAS will administer the ATP under authorities of the CCC. The ATP 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 November 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.

Response

In response to the announcement, the American Soybean Association (ASA) released the following statement:

“We welcome USDA’s announcement that soybean farmers will receive a payment on their 2018 production to partially offset the impact of China’s tariff on U.S. soybean imports,” said ASA President John Heisdorffer, a soybean producer from Keota. “This will provide a real shot in the arm for our growers, who have seen soybean prices fall by about $2.00 per bushel, or 20 percent, since events leading to the current tariff war with China began impacting markets in June.” Heisdorffer explained, “This assistance will be particularly helpful to farmers who didn’t forward-contract their crop earlier this year and who need to arrange financing for planting next year’s crop.”

The expected value of the 2018 soybean crop has been under increasing pressure ever since tariffs were imposed first by the U.S. and then by China on July 6. In the last two months, USDA has raised its estimate for soybean production in 2018 to a record 4.6 billion bushels, reduced its estimate for soybean exports in the 2018-19 marketing year by 230 million bushels, and projected an 82 percent increase in soybean carryover stocks to 785 million from 430 million bushels by September 2019.

Heisdorffer also emphasized that, “ASA strongly supports USDA’s initiative to provide an additional $200 million to develop foreign markets through a Trade Promotion Program. Increasing funding for market development has been a top ASA priority for this year’s farm bill and is even more critical given the need to find new export markets for U.S. soy and livestock products.”

“While this assistance package will definitely help our farmers get through the bad patch we’re currently facing,” Heisdorffer continued, “we must remain focused on market opportunities in the long term. Indications that the NAFTA negotiations with Mexico are heading toward a successful outcome are also welcome news for U.S. soybean farmers.” Heisdorffer added that, “We hope a new NAFTA will build on the original agreement for U.S. soy and livestock product exports and that Canada will soon join the pact.”

The National Corn Growers Association (NCGA) said in a release that USDA trade aid won’t make up for lost markets.

“NCGA members had a spirited debate on the prospect of trade aid during last month’s Corn Congress meeting,” said NCGA President and North Dakota farmer Kevin Skunes. “While most members prefer trade over aid, they support relief if it helps some farmers provide assurances to their local bankers and get through another planting season. Unfortunately, this plan provides virtually no relief to corn farmers.”

According to an NCGA-commissioned analysis, which NCGA provided to USDA and the Office of Management and Budget (OMB), trade disputes are estimated to have lowered corn prices by 44 cents per bushel for crop produced in 2018. This amounts to $6.3 billion in lost value on the 81.8 million acres projected to be harvested in 2018. USDA’s plan sets the payment rate for corn at just one cent per bushel.

“NCGA has understood from the beginning that this aid package would neither make farmers whole nor offset long-term erosion of export markets. But, even with lowered expectations, it is disappointing that this plan does not consider the extent of the damage done to corn farmers,” Skunes said. “Once again, we are calling on the Administration to settle trade disputes and support a strong Renewable Fuel Standard. These no-cost, immediate actions would deliver a real win for rural America.”

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