USDA Launches Program for Farmers Affected by Trade Disputes

U.S. agricultural producers, including those from North Dakota being impacted by ongoing trade disputes, will get some relief. The Trump administration and the U.S. Department of Agriculture (USDA) have announced a program to aid those farmers.

The USDA's Market Assistance Program is a $12 billion aid package intended to provide relief for the 2018 crop marketing year.

The Market Assistance Program will include the Market Facilitation Program (MFP), using the Commodity Credit Corporation to provide direct payments to corn, cotton, soybean, sorghum, wheat, dairy and pork producers. The MFP, affecting many North Dakota producers, will be administered by the Farm Service Agency (FSA).

Also included is a Food Purchase and Distribution Program that allows the USDA to purchase some of the commodities that were not exported due to the trade disputes, such as beef and selected pulse crops. In addition, the Market Assistance Program includes a trade promotion component intended to identify and establish new trading partners for U.S. agricultural commodities.

"The payments are intended to be paid to producers harvesting 2018 crops that have been impacted by the ongoing trade dispute, as well as hogs and dairy products," says Bryon Parman, North Dakota State University Extension agricultural finance specialist. "The USDA has stated that the payment rates are dependent upon the estimated severity of impact to specific commodities and based upon actual 2018 production numbers."

Producers may apply only after the harvest is complete so that it can be certified, and no earlier than Sept. 4, 2018. The application period for the first round of payments closes on January 15, 2019.

The USDA is reporting that the MFP will have two phases. An initial payment will be calculated by multiplying 50 percent of the actual 2018 production by the MFP rate designated for that commodity.

Eligibility requires an ownership interest in the commodity, active engagement in farming and an average adjusted gross income for 2014 to 2016 of less than $900,000. Payments will be capped at $125,000 per person, or entity, for the combined production of corn, cotton, sorghum, soybeans and wheat. The program also has a $125,000 dollar combined cap for hogs and dairy. However, payments made under the MFP will not count against the cap for payments under the 2014 farm bill.

For hogs, the payment will be determined by the number of live hogs owned on Aug. 1, 2018. For dairy, payments will be based on the highest production year from 2011 to 2013 using production from the Margin Protection Program.

"The USDA will announce a decision on the second phase regarding the remaining 50 percent of a producer's 2018 production on or about December 3, 2018," Parman says. "However, a second payment is not assured at this time. Further, the rates given for the initial payment may be subject to change. Determination of a second payment likely will be based upon the timeliness of trade resolutions."

The initial MFP payment will cost approximately $4.7 billion. The other two programs, including the Agricultural Marketing Service, and the Foreign Agricultural Service Ag Trade Promotion Program, will cost $1.2 billion and $200 million, respectively. Thus, based upon current estimates, the initial rollout of the Market Assistance Program will cost $6.1 billion of the authorized $12 billion.

"It is important to note that the Market Facilitation Program and Food Purchase and Distribution Program are not intended to overcome all additional financial hardship resulting from the trade dispute," Parman adds. "The stated intent is to provide short-term relief for affected farmers, allowing time for a resolution to ongoing negotiations. As such, the Market Facilitation Program and the Food Purchase and Distribution Program are one-time assistance packages, and not multiyear programs."

The need for the Market Assistance Program is due to the U.S. implementation of import tariffs on select products last spring. Countries who exported those products implemented retaliatory tariffs on goods imported to them from the U.S.

Many of the products affected by the tariffs are U.S. agricultural exports, including those eligible to receive MFP payments, as well as dried distillers grains, beef and poultry, among others.

For North Dakota farmers and ranchers, one of the most impactful retaliations has been the 25 percent tariff China enacted on July 6, affecting $34 billion in U.S. exports. These tariffs most notably effected soybeans and pork, because China is a major importer of those commodities.

Because China is the largest outlet for North Dakota-produced soybeans, cash prices in North Dakota are especially sensitive to changes in the flow of soybeans destined for China. Additionally, since July 5, Mexico has imposed a 25 percent tariff on $3 billion of goods imported from the U.S., including selected pork products and potatoes.

Further retaliation by the U.S. and certain trade partners, including the European Union and Mexico, have been muted. On Aug. 27, the Trump administration announced that a new trade deal had been reached with Mexico, and negotiations with Canada appear to be ongoing. However, no progress has been announced regarding the dispute between the U.S. and China.

For more information on the USDA's Market Facilitation Program, visit https://www.farmers.gov/mfp, or contact the FSA office in your area.