The Trump administration will make up to $16 billion in new direct payments to producers and commodity purchases under a trade assistance package that was expanded and significantly modified from the aid package announced last year in response to retaliatory tariffs imposed on U.S. farm exports.
Initial reaction to the plan was mixed, due in part to the lack of key details.
Under the revised, $14.5 billion Market Facilitation Program, payments will be made to producers of grain, oilseeds, cotton, rice, peanuts, alfalfa and other non-specialty crops based on a fixed rate for the county in which the producer farms and their 2019 planted acreage for those crops.
The payment rates, which were not released, will be based on USDA's calculation of the impact of the ongoing trade war on each county. Under the 2018 payment plan, there were individual payment rates for production of each commodity.
Additional payments will be made to producers of milk, pork, tree nuts and some fruit. The payments to milk producers will be based on their production history and to pork producers on their hog inventory at a time that will be announced later. Payments for tree nuts, fresh sweet cherries, cranberries and fresh grapes will be based on farmers' 2019 acreage.
Bill Northey, USDA's undersecretary for farm production and conservation, said using county-by-county payment rates will avoid influencing farmers' planting decisions and will be easy for producers to understand and for USDA to administer.
The MFP payments will be dispensed in up to three rounds, with the first going out in July and August. The amount of the first round was not released. Whether the second or third rounds are made will depend on progress in the ongoing negotiations with China, said Agriculture Secretary Sonny Perdue.
The aid package “ensures that framers will not bear the brunt of those trade practices by China or any other nation” that the administration is challenging, said Perdue.
Another $1.4 billion will be earmarked for purchase of fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk to be distributed to schools and food banks. Some $100 million will be used for foreign market promotion efforts.
Many commodity groups welcomed the announcement but cautioned that it's only a short-term fix to the impact of the ongoing trade war with China on the farm economy.
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"There's still a lot of unknowns about how this (the revised MFP) will play out in different areas," Davie Stephens, president of the American Soybean Association, said in an interview with Agri-Pulse ahead of a meeting Thursday afternoon with President Trump and leaders of other farm groups.
The lack of key details about the MFP payments may introduce new uncertainty into farmers' planting decisions at a time when many have been having trouble getting into wet fields, said University of Illinois economist Scott Irwin.
"USDA obviously (was) petrified about influencing planting decision. But this seems worse to me than influencing decisions. Everyone will be guessing now. Should never happen," Irwin said on his Twitter account.
The top Democrat on the Senate Agriculture Committee, Debbie Stabenow of Michigan, criticized the overall aid plan, saying the "complex scheme" leaves producers "with more questions than answers. I have a number of concerns about whether this plan is fair and equitable to all farmers."
Rep. Jim Costa, D-Calif., said that under the "rushed and poorly planned bailout," some fruit and vegetable crops produced in central California "will receive a different and possibly reduced level of aid."
But Sen. John Thune, R-S.D., welcomed the changes that USDA made to MFP. "This is a much better approach than what they did last time, which was (to base payments on) actual production. If you didn't get a crop last year you didn't benefit from it."
Some of the confusion was around the issue of prevented planting acres, raising concerns that they would not be eligible for MFP payments. However, that issue appeared to have been addressed just hours later when the Senate released a disaster aid bill that was expanded to include assistance for prevented-planted acreage as well as crops that were damaged by hurricanes or flooded while in storage.
The full list of crops that will qualify for the new, county-based MFP payments: alfalfa hay, barley, canola, corn, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, upland cotton, and wheat
The previous $12 billion trade package included MFP payments that were based on payment rates of $1.65 per bushel for soybeans, 14 cents per bushel for wheat, and 1 cent for corn. It also wasn't clear whether acres on which farmers apply for prevented-planted benefits this year will qualify for MFP payments.
There were also payments for cotton (6 cents per pound), sorghum (86 cents per bushel), dairy (12 cents per hundredweight), hogs ($8 per head), almonds (3 cents per pound) and fresh sweet cherries (16 cents per pound).
USDA's chief economist, Rob Johansson, said the calculation of damage to farmers was based on a longer period and on more factors that were used in calculating the initial aid package. He said the details would be released later.
For more news, go to www.Agri-Pulse.com.