Trump, Perdue launch second round of Market Facilitation Program payments
December 19, 2018
President Donald Trump and Agriculture Secretary Sonny Perdue today launched the second and final round of trade mitigation payments aimed at assisting farmers suffering from damage due to trade retaliation by foreign nations.
The Trump administration has called the tariffs that other countries have imposed unjustified, but Trump first imposed tariffs on imported steel and aluminum on national security grounds. The other countries followed by imposing tariffs on U.S. farm products as well as other goods.
Until Dec. 17 2018, it was unclear whether the Trump administration would follow through with the second round of payments. Agriculture Secretary Sonny Perdue and Agriculture Secretary Steve Censky said last week that the Office of Management and Budget was trying to delay or stop the payments in hopes that the Chinese would start buying more U.S. farm products. The Chinese did increase purchases last week, but they still make up only a small portion of what they bought in years past.
Trump tweeted, "Today I am making good on my promise to defend our Farmers & Ranchers from unjustified trade retaliation by foreign nations. I have authorized Secretary Perdue to implement the 2nd round of Market Facilitation Payments. Our economy is stronger than ever – we stand with our Farmers!"
“The president reaffirmed his support for American farmers and ranchers and made good on his promise, authorizing the second round of payments to be made in short order. While there have been positive movements on the trade front, American farmers are continuing to experience losses due to unjustified trade retaliation by foreign nations. This assistance will help with short-term cash flow issues as we move into the new year Sonny Perdue, agriculture secretary
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"The president reaffirmed his support for American farmers and ranchers and made good on his promise, authorizing the second round of payments to be made in short order. While there have been positive movements on the trade front, American farmers are continuing to experience losses due to unjustified trade retaliation by foreign nations. This assistance will help with short-term cash flow issues as we move into the new year," said Perdue.
Producers of certain commodities will now be eligible to receive Market Facilitation Program (MFP) payments for the second half of their 2018 production.
According to a chart issued by USDA, the total cost of the commodity payments will be $9.6 billion. (See chart below, and link to USDA's press release.)
Producers need only sign up once for the MFP to be eligible for the first and second payments. The MFP sign-up period opened in September and runs through January 15, 2019, with information and instructions provided at http://www.farmers.gov/mfp. Producers must complete an application by January 15, 2019, but have until May 1, 2019, to certify their 2018 production.
The MFP provides payments to almond, cotton, corn, dairy, hog, sorghum, soybean, fresh sweet cherry, and wheat producers who have been significantly impacted by actions of foreign governments resulting in the loss of traditional exports. The MFP is established under the statutory authority of the Commodity Credit Corporation CCC Charter Act and is under the administration of USDA's Farm Service Agency. Eligible producers should apply after harvest is complete, as payments will only be issued once production is reported.
For farmers who have already applied, completed harvest, and certified their 2018 production, a second payment will be issued on the remaining 50 percent of the producer's total production, multiplied by the MFP rate for the specific commodity.
USDA has also initiated two other programs:
USDA's Agricultural Marketing Service (AMS) is administering a food purchase and distribution program to purchase up to $1.2 billion in commodities unfairly targeted by unjustified retaliation. USDA's Food and Nutrition Service (FNS) is distributing these commodities through nutrition assistance programs, such as The Emergency Food Assistance Program and child nutrition programs. So far, USDA has procured some portion of 16 of the 29 commodities included in the program, totaling more than 4,500 truckloads of food. AMS will continue purchasing commodities for delivery throughout 2019.
Through the Foreign Agricultural Service's (FAS) Agricultural Trade Promotion (ATP) program, $200 million is being made available to develop foreign markets for U.S. agricultural products. The program will help U.S. agricultural exporters identify and access new markets and help mitigate the adverse effects of other countries' restrictions. The application period closed in November with more than $600 million in requested activities from more than 70 organizations. FAS will announce ATP funding awards in early January.
American Farm Bureau Federation President Zippy Duvall praised the release of the MFP funds.
"This latest trade mitigation package announcement will help our farmers and ranchers weather the continuing trade storm," Duvall said in a news release. "We continue to feel price pressure and very real economic damage due to the trade actions other nations have taken against our U.S. farm exports. While this assistance package will help a number of our farm families during this year of severe economic challenge, the best way to provide lasting relief is to continue pushing for trade and tariff reform from trading partners like China, Canada, Mexico, India, Turkey and the European Union."
But the National Corn Growers Association expressed disappointment that corn farmers' payments will be small.
"One cent per bushel is woefully inadequate to even begin to cover the losses being felt by corn farmers. USDA did not take into account the reality that many of our farmers are facing," NCGA President Lynn Chrisp said in a news release.
According to an NCGA-commissioned economic analysis, corn farmers suffered a 44-cent per bushel loss in the price of corn from the beginning of May, right before tariffs were announced, through July, when tariffs were implemented. Based on USDA yield averages and acres of corn planted, that amounts to a $6.3 billion loss to corn farmers.
"Farmers of all crops have felt the impact of trade tariffs," said Chrisp. "NCGA appreciates the progress the administration has made to advance ethanol, reach a new agreement with Mexico and Canada and move forward on negotiations with Japan, but the benefits of these efforts will take time to materialize, and farmers are hurting now."
National Milk Producers Federation President and CEO Jim Mulhern said, "The tariff-mitigation payment for dairy farmers in this second round of payments is less than we had hoped for, but it will provide some assistance during difficult times.
"The tit-for-tat tariffs that prompted these mitigation payments continue to inflict damage across the farm economy. We urge the administration to resolve tensions with key trading partners, including China and Mexico, as the best way to assist farmers going forward."
National Sorghum Producers Board of Directors Chairman Dan Atkisson, a sorghum farmer from Stockton, Kan., said, "Sorghum producers are at the end of a difficult harvest season in many regions of the Sorghum Belt, and these payments will help mitigate the drop in prices sorghum farmers have faced since China stopped importing U.S. sorghum earlier this spring.
"We are also encouraged by the recent soybean purchases made by China, and we remain hopeful these sales are a sign negotiations between the U.S. and China will soon lead to a positive resolve. U.S. sorghum farmers look forward to working with our Chinese customers again in the near future, and NSP will continue to work on behalf of our members to achieve long-term markets solutions that benefit sorghum farmers."
National Cotton Council Chairman Ron Craft, a Plains, Texas, ginner, said, "The National Cotton Council is very appreciative of Secretary Perdue and his team at USDA. This tariff mitigation program will help address a portion of the losses cotton producers are facing in the marketplace."
–The Hagstrom Report