By Max Fisher, Director of Economics and Government Relations
The U.S. Department of Agriculture’s (USDA) Market Facilitation Program (MFP) payment rates will range between $15 and $150 per acre and will be made in three parts, with the first payments expected in mid-August, the agency announced July 25.
The 2019 MFP package is intended partially to compensate U.S. producers with commodities affected by retaliatory tariffs imposed by foreign countries, with total payments reaching up to $14.5 billion. (The agency also authorized up to $1.4 billion for the Food Purchase and Distribution Program, and $100 million for the Agricultural Trade Promotion Program.)
The first and largest installment of MFP payments will be up to 50 percent of the total calculated MFP payment. USDA’s Commodity Credit Corporation (CCC) will determine if the second and third MFP installments are warranted based on the status of trade actions of foreign governments.
If CCC determines that a second installment is warranted, it will be up to 75 percent of the total calculated MFP payment, minus the amount received in the first installment. This second installment would begin in November. If CCC determines that a final installment is warranted, it will be for the remaining amount of the total calculated MFP payment (unless otherwise adjusted by CCC) and would begin in January 2020.
MFP payment rates for agricultural commodities referred to as “non-specialty crops” (such as soybeans, corn and wheat) will be made on a county-by-county basis and reflect the amount of economic damage incurred in a county from the imposition of tariffs by other countries on U.S. agricultural products. The non-specialty crop payment rates have been established on a single rate-per-acre basis for each county, ranging from $15 to $150 per acre. In the first installment, all eligible producers will receive $15 per acre and producers in counties with MFP payment rates exceeding $30 per acre will receive 50 percent of the county’s MFP payment rate.
NGFA’s understanding of USDA’s payment rate methodology is that USDA estimated the national-level price damage for each crop using 2009-18 trade data. USDA then multiplied each crop’s national-level price damage by the average 2015-17 production for each crop in every county. Next, USDA summed the damage for each county’s crops and divided it by the county’s average 2015-17 acreage to determine the county payment rate. Under this formula, counties with a large proportion of production from crops with greater trade damage are more likely to have higher payment rates.
USDA made changes to its methodology used to estimate each crop’s trade damage, said USDA Chief Economist Rob Johansson in a July 25 briefing. The 2018 MFP used 2017 trade data to estimate trade damage, whereas the 2019 MFP uses 2009-18 trade data. In addition, the mix of countries and their levels of tariffs on U.S. agricultural products is different for 2019 than it was in 2018; for example, China and India have added tariffs, while Mexico and Canada have removed tariffs.
Non-specialty crops eligible for MFP payments include: alfalfa hay, barley, canola, corn, crambe, dried beans, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, millet, mustard seed, oats, peanuts, rapeseed, rye, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, triticale, upland cotton and wheat.
The total number of acres used to calculate an MFP payment on a farm will be equal to 2019 planted acres of non-specialty crops, not to exceed 2018 planted acres and prevented planted acres of non-specialty crops, as adjusted for acreage that is available for planting as a result of 2018 expired Conservation Reserve Program contracts. If requested, producers will be required to provide supporting documentation as determined by CCC to support the acreage reported on form FSA-578.
A nationwide MFP payment rate of $15 per acre will be used to provide financial assistance to producers who were prevented from planting a 2019 non-specialty crop on a farm but were able to plant a CCC-approved cover crop intended for harvest. Cover crops that are planted for harvest following a prevented planted crop must be planted no later than Aug. 1. Cover crops and non-specialty crops planted after that date are not eligible for assistance under MFP.
Meanwhile, specialty crop producers will receive an MFP payment based on 2019 acres of fruit- or nut-bearing plants. Specialty crops are: almonds, cranberries, cultivated ginseng, fresh grapes, fresh sweet cherries, hazelnuts, macadamia nuts, pecans, pistachios, and walnuts.
In addition, dairy producers will receive a 20-cent-per-hundredweight payment on historical production reported for the Dairy Margin Coverage Program, while hog producers will receive an $11-per-head payment based on the number of live hogs owned on a day selected by the producer between April 1 and May 15, 2019.
To be eligible for MFP assistance, a person or legal entity cannot have an average adjusted gross income greater than $900,000. But that limitation can be waived if at least 75 percent of that income is derived from farming-, ranching- or forestry-related activities.
The 2019 Disaster Relief Act established the $900,000 income threshold for MFP payments, which is less restrictive than the income threshold that had been in place for the 2018 MFP. Accordingly, USDA said CCC will reopen the 2018 MFP program application process for just those producers affected by this statutory mandate; that application period will run concurrently with the 2019 MFP application period.
For 2019 MFP payments, there will be three separate payment limitations for each person or legal entity: 1) $250,000 for non-specialty crops; 2) $250,000 for specialty crops; and 3) $250,000 for hogs and milk. However, no person or legal entity can receive more than $500,000 in total payments under the 2019 MFP.