USDA releases 2019 Market Facilitation Program (MFP) details.
On Thursday, the USDA announced that the federal government will pay American farmers between $15 to $150 per acre starting in mid-August. The latest MFP compensation structure is part of the broader $16 billion aid package to compensate U.S. agricultural producers that have experienced economic harm by the protracted trade wars. The payment structure represents the second round of farm assistance programs following President Trump’s $12 billion plan last year. The MFP program is designed to compensate farm level producers for lower farm goods prices and lost sales due to U.S. trade disputes with China, the EU, Turkey and India. USDA selected China as its benchmark for the MFP over the other three countries because of the breadth of U.S. agricultural commodities that have been impacted.
The amounts were calculated based on estimated trade damage caused by retaliatory tariffs imposed by China. USDA said payment registrations would begin on Monday, July 29, and last through Dec. 6. The payments will be conducted in three tranches, or portions. The first payment will be comprised of the higher of either 50% of a producer’s calculated payment or $15 per acre and will be made during mid-to-late August. If conditions warrant, the second tranche, portion, will be made in November, and the third in early January.
In the current MFP package, the USDA established a compensation structure based on county level rates. The compensation rate is dependent on the geographical location of the producing field.
The program covers 29 crops including: soybeans, corn, wheat, sorghum and cotton. It also covers dairy and hog producers and 10 specialty crops including nuts, cranberries and cherries.
FBN estimates the USDA’s MFP per-acre rates at:
- Corn: $40
- Soybeans: $78
- Wheat: $18
- Cotton: $144
- Sorghum: $24
Who is eligible for payments. MFP provides payments to eligible producers of covered commodities, which includes non-specialty crops, specialty crops, dairy, and livestock.
To be eligible for payments, applicants also must either:
- have an average adjusted gross income for tax years 2015, 2016, and 2017 of less than $900,000;
- or derive at least 75 percent of their adjusted gross income from farming or ranching.
Producers also must:
- Comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions.
- Have a farm number with USDA's Farm Service Agency
Click for application and full details of the USDA 2019 Market Facilitation Program.
What this means for the U.S. farmer. We believe that the 2019 MFP compensation structure is a net benefit to the U.S. farmer. At FBN, we believe that history has proven that both the U.S. agricultural producer and the domestic farm economy stands to reap greater economic benefits from free trade than from government assistance programs. The economic damage that has been inflicted on both the U.S. agricultural producer and the domestic agricultural economy as a result of unfair trade practices against the U.S., which has stretched over two U.S. presidents, has been profound. While the MFP is not designed to be — and cannot be — an economic panacea for the U.S. farmer, we believe that the USDA’s payment plan represents the proverbial “step in the right direction", helping offset some of the recent economic loss. We also believe that the MFP compensation structure has the ability to provide more questions than answers. When the USDA releases the details of the compensation formulas, FBN will provide the necessary clarity.