August 27, 2018
DETAILS ANNOUNCED FOR FARM TARIFF AID
USDA has authorized up to $12 billion in a “Trade Retaliation Mitigation” (farm tariff) aid package for 2018 to help offset the financial impacts on farmers that have been created by the ongoing trade disputes with China, Mexico, Canada and other countries. The aid package will include direct payments to producers of affected farm commodities, purchases of surplus commodities for food and feeding programs, and trade promotion programs. The financial aid package will be administered in a manner that is consistent with World Trade Organization (WTO) requirements.
The USDA aid package will be implemented in 2018 and will include three components:
- Direct payments to farmers — USDA will provide direct aid payments under the “Market Facilitation Program” (MFP) to producers of the following commodities: soybeans, corn, sorghum, wheat, cotton, hogs, and dairy. The MFP program will be administered under the USDA Commodity Credit Corporation (CCC) through local Farm Service Agency (FSA) offices. The MFP payments will be made in two phases, with the first payments to begin after September 4. Total allocation for phase 1 of the MFP program is approximately $4.7 billion, plus a similar amount for phase 2, if all payments are allocated.
- Purchase of surplus commodities — USDA will purchase excess pork, beef, dairy products, rice, fruits, vegetables, nuts, and other ag products for distribution to school nutrition programs, food banks and other outlets. Approximately $1.3 billion has been allocated for these commodity purchases.
- Agricultural Trade Promotion (ATP) Program — The ATP programs will be administered by USDA’s Foreign Agriculture Service (FAS), with the goal of securing new agriculture trade relations and agreements in the future. Approximately $200,000 has been allocated for ATP programs.
Following are the initial details for the Market Facilitation Program (MFP):
- The sign-up period will begin on September 4, 2018 and continue through January 15, 2019.
- MFP applications can be made at local FSA offices, or can be submitted electronically to FSA offices via scanning, e-mail, or fax.
- Crop producers can make application for MFP program once they have completed their 2018 harvest and can verify their bushels of production.
- Crop producers that are requesting MFP payments must have a 2018 crop acreage report on file at their local FSA office. Acceptable crop production verification will be similar to other required yield verification through FSA or federal crop insurance.
- To be eligible for MFP payments, producers must meet FSA requirements for adjusted gross income and “actively engaged” in farming, as well as wetland and conservation requirements.
- Total MFP payments to producers for all grain crops will be capped at a combined $125,000 per person or legal entity. Similarly, total livestock payments for hogs and dairy will also be capped at $125,000. MFP payments will not count against other farm program payment limits.
- Payments for dairy producers will be based off the historical milk production levels that have been reported to FSA offices under the Margin Protection Program (MPP) for dairy producers, and dairy producers must have been in operation on June 1, 2018
- Payments to hog producers will be on a per head basis and will be based on the number of hogs owned on August 1, 2018. Production records for hogs will include breeding records, inventory record, sales receipts, rendering receipts, and veterinary records.
- The first payment will be 50 percent of the calculated payment, based on the payment formula. The first payments to producers will be made after September 4, once the production information has been verified by FSA.
- USDA will determine later if there will be a second payment and what the payment level will be, which will be paid on the remaining 50 percent of the 2018 production levels (as calculated earlier). Details on the second MFP payments (if they occur) will be announced by USDA in December, 2018.
- MFP payment rates are as follows:
- Soybeans = $1.65 per bushel
- Corn = $.01 per bushel
- Wheat = $.14 per bushel
- Sorghum = $.86 per bushel
- Cotton = $.06 per pound
- Hogs = $8.00 per head (on August 1, 2018)
- Dairy = $.12 per cwt. (milk)
- The formula for the first payment will be bushels (grains), head (hogs), or pounds (milk), times the payment rate for each commodity, times 50 percent (.50).
Soybean Example — 50,000 Bu. harvested x $1.65/Bu. x .50 = $41,250 (first payment)
Local FSA offices will be providing more details on the MFP sign-up process, production verification, and other information very soon. There is more information, a MFP fact sheet, and other very useful application tips available for the MFP program available on a special USDA web site at: www.farmers.gov/MFP.
Note — For additional information contact Kent Thiesse, Farm Management Analyst and Senior
Vice President, MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960);
E-mail — email@example.com)