On the backdrop of a bilateral trade deal with Mexico, the U.S. Department of Agriculture rolled out details of its July-announced trade aid to U.S. farmers on Monday afternoon. The $12 billion promise will be bifurcated, and the first round of approximately $4.7 billion will come in the form of direct payments to producers of commodities hit most by the actions under the Section 232 and Section 301 retaliatory tariffs.
Bill Northey, undersecretary for farm production and conservation, said the Market Facilitation payments will be based on 50% of the actual production or inventory for 2018.
For crops, payment rates include 14 cents/bu. for wheat, 86 cents/bu. for sorghum, $1.65/bu. for soybeans, 1 cent/bu. for corn and 6 cents/lb. for cotton.
Pork producers will receive payments based on 50% of the total number of pigs they have on hand as of Aug. 1 at a payment rate of $8 per pig.
Dairy production will be offered 12 cents/cwt. based on historical production, which was established under the Margin Protection Program. Northey said producers can have that production number calculated if it isn’t available.
Of the total $4.7 billion in aid, $3.6 billion will be for soybean farmers, $277 million for cotton, $290 million for pork, $127 million for dairy, $156 million for sorghum, $119 million for wheat and $96 million for corn.
Signups will run from Sept. 4 to the middle of January 2019. For crops already harvested or the dairy and pork support, Northey said payments could come as soon as a week after production or inventory was verified at local Farm Service Agency offices.
USDA chief economist Dr. Rob Johannson said USDA will evaluate whether another round of payments is warranted closer to December. This will depend on whether there’s been a recovery in prices from other trade deal announcements, such as the one with Mexico, or if tariffs are resolved.
“We have announced an initial payment rate and initial purchase agreement. We will continue to evaluate the market in the next several months, and then the secretary will determine with consultation of the White House on the second round of payments,” Johannson said.
USDA’s Agricultural Marketing Service will administer a Food Purchase & Distribution Program to purchase up to $1.2 billion in commodities unfairly targeted by unjustified retaliation. USDA’s Food & Nutrition Service will distribute these commodities through nutrition assistance programs such as The Emergency Food Assistance Program and child nutrition programs.
Greg Ibach, USDA undersecretary for regulatory affairs, said pork and dairy are both sectors identified as incurring great harm from the illegal tariffs. He said up to $84 million worth of dairy products will be distributed domestically and $585 million worth of pork products. Apples are another commodity greatly affected, so USDA will purchase an estimated $943 million worth of apples.
Through the Foreign Agricultural Service’s Agricultural Trade Promotion Program, $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.