USDA issues 2nd round of trade aid payments

USDA issues 2nd round of trade aid payments

Producers of certain commodities will now be eligible to receive trade mitigation payments for the second half of their 2018 production.

Secretary of Agriculture Sonny Perdue launched the second and final round of trade mitigation payments Monday aimed at assisting farmers suffering from damage due to unjustified trade retaliation by foreign nations. Producers of certain commodities will now be eligible to receive Market Facilitation Program (MFP) payments for the second half of their 2018 production. The payment rates were not changed from the first round announced in September. 

In recent days, speculation had increased as to whether the second round of payments would be altered due to the pickup of soybean sales to China. In addition, reports indicated the Office of Management & Budget was holding up final approval of the payments.

“While there have been positive movements on the trade front, American farmers are continuing to experience losses due to unjustified trade retaliation by foreign nations. This assistance will help with short-term cash flow issues as we move into the new year,” Perdue said.

Perdue announced in July that the U.S. Department of Agriculture would act to aid farmers in response to trade damage from unjustified retaliation. President Donald Trump directed Perdue to craft a short-term relief strategy to help protect agricultural producers while the Administration works on free, fair and reciprocal trade deals to open more markets to help American farmers compete globally. In September, USDA initiated three programs to aid American agriculture in sustaining the short-term damages associated with the trade disputes and securing long-term, stable export markets.

USDA’s Farm Service Agency (FSA) has been administering MFP to provide the first payments to almond, corn, cotton, dairy, hog, sorghum, soybean, fresh sweet cherry and wheat producers since September 2018 for the first 50% of their 2018 production. The second round of payments will be at the same rate of the first round and on the other half of production.

For farmers who have already applied, completed harvest and certified their 2018 production, a second payment will be issued on the remaining 50% of the producer’s total production, multiplied by the MFP rate for the specific commodity.

MFP was established under the statutory authority of the Commodity Credit Corp. CCC Charter Act and is under the administration of FSA. Eligible producers should apply after harvest is completed, as payments will only be issued once production is reported. 

Producers need only sign up once for MFP to be eligible for the first and second payments. The MFP signup period opened in September and runs through Jan. 15, 2019, with information and instructions provided at Producers must complete an application by Jan. 15, 2019, but have until May 1, 2019, to certify their 2018 production. MFP provides payments to almond, cotton, corn, dairy, hog, sorghum, soybean, fresh sweet cherry and wheat producers who have been significantly affected by actions of foreign governments resulting in the loss of traditional exports.

The payments are as follows: almonds (shelled) at 3 cents/lb. for an estimated total payment of $63,300; cotton at 6 cents/lb. for an estimated total payment of $553,800, corn at 1 cent/bu. for an estimated total payment of $192,000, dairy (milk) with a payment of 12 cents/cwt. for an estimated total payment of $254,800, pork (hogs) at an $8.00 per head payment for an estimated total payment of $580,600, soybeans at $1.65/bu. for an estimated total payment of $7.2594 million, sorghum at 86 cents/bu. for an estimated total payment of $313,600, sweet cherries (fresh) at a payment of 16 cents/lb. for an estimated total payment of $111,500, and wheat at 14 cents/bu. for an estimated total payment of $238,400. The total direct payments to producers is estimated at $9.5674 million.

MFP payments are limited to a combined $125,000 for corn, cotton, sorghum, soybeans and wheat, capped per person or legal entity. MFP payments are also limited to a combined $125,000 for dairy and hog producers and a combined $125,000 for fresh sweet cherry and almond producers. Applicants must also have an average adjusted gross income of less than $900,000 for tax years 2014, 2015 and 2016. Applicants must also comply with the provisions of the Highly Erodible Land & Wetland Conservation regulations.

Soybean growers are expected to receive the greatest payout from the aid because they've seen the greatest slump in sales due to the trade war. They expressed appreciation for the second round of payments.

"While it will not make our losses whole, it will certainly help offset the drop in prices we have experienced since China cut off U.S. soybean imports,” said American Soybean Assn. (ASA) president Davie Stephens, a soybean producer from Clinton, Ky. “We saw some initial sales of U.S. soybeans to China last week, which was also welcomed news and, we hope, a sign that the trade war could be turning a corner as a result of President Trump’s recent meeting with President Xi [Jinping].”

American Farm Bureau president Zippy Duvall said the latest trade mitigation package announcement will help farmers and ranchers weather the continuing trade storm.

"We continue to feel price pressure and very real economic damage due to the trade actions other nations have taken against our U.S. farm exports. While this assistance package will help a number of our farm families during this year of severe economic challenge, the best way to provide lasting relief is to continue pushing for trade and tariff reform from trading partners like China, Canada, Mexico, India, Turkey and the European Union,” Duvall added.

Additional assistance

As part of the trade assistance announced earlier this fall, USDA’s Agricultural Marketing Service (AMS) is administering a food purchase and distribution program to purchase up to $1.2 billion in commodities unfairly targeted by unjustified retaliation. USDA’s Food & Nutrition Service (FNS) is distributing these commodities through nutrition assistance programs such as the Emergency Food Assistance Program and child nutrition programs.

So far, USDA has procured some portion of 16 of the 29 commodities included in the program, totaling more than 4,500 truckloads of food. AMS will continue purchasing commodities for delivery throughout 2019, USDA said.

Through the Foreign Agricultural Service’s (FAS) Agricultural Trade Promotion (ATP) program, $200 million are being 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. The application period closed in November with more than $600 million in requested activities from more than 70 organizations. FAS said it will announce ATP funding awards in early January.

TAGS: Policy
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