The much anticipated second round of trade assistance has been released. The Trump Administration had been promising farmers a second round of trade assistance for the past two weeks. Today, the USDA released more details on the new program. Although farmers would prefer trade not aid, they also need to be able to pay off their farm loans.
U.S. Secretary of Agriculture Sonny Perdue said that the USDA will take several actions to assist farmers in response to trade damage from unjustified retaliation and trade disruption. Trump directed Perdue to craft a relief strategy to support American agricultural producers while the Administration continues to work on free, fair, and reciprocal trade deals to open more markets in the long run to help American farmers compete globally.
Specifically, the president has authorized the USDA to provide up to $16 billion in programs, which is in line with the estimated impacts of unjustified retaliatory tariffs on U.S. agricultural goods and other trade disruptions. These programs will assist agricultural producers while Trump works to address long-standing market access barriers.
The second round of trade assistance will include three program : Market Faciliation Program (set up differently than last year), Food Purchase and Distribution Program, and Agricultural Trade Promotion Program.
Market Facilitation Program (MFP) for 2019, authorized under the Commodity Credit Corporation Charter Act and administered by the Farm Service Agency, will provide $14.5 billion in direct payments to producers.
- Producers of 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 will receive a payment based on a single county rate multiplied by a farm’s total plantings to those crops in aggregate in 2019. Those per acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions. Moreover, total payment-eligible plantings cannot exceed total 2018 plantings.
- Dairy producers will receive a per hundredweight payment on production history and hog producers will receive a payment based on hog and pig inventory for a later-specified time frame.
- Tree nut producers, fresh sweet cherry producers, cranberry producers, and fresh grape producers will receive a payment based on 2019 acres of production.
- These payments will help farmers to absorb some of the additional costs of managing disrupted markets, to deal with surplus commodities, and to expand and develop new markets at home and abroad.
- Payments will be made in up to three tranches, with the second and third tranches evaluated as market conditions and trade opportunities dictate. The first tranche will begin in late July/early August as soon as practical after Farm Service Agency crop reporting is completed by July 15th. If conditions warrant, the second and third tranches will be made in November and early January. In a press call, USDA insinuated the first payment could be more than the second and third, due to a potential trade agreement.
Food Purchase and Distribution Program (FPDP): Additionally, CCC Charter Act authority will be used to implement a $1.4 billion Food Purchase and Distribution Program through the Agricultural Marketing Service to purchase surplus commodities affected by trade retaliation such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk for distribution by the Food and Nutrition Service to food banks, schools, and other outlets serving low-income individuals.
Agricultural Trade Promotion Program: Finally, the CCC will use its Charter Act authority for $100 million to be issued through the Agricultural Trade Promotion Program administered by the Foreign Agriculture Service to assist in developing new export markets on behalf of producers.
Further details regarding eligibility and payment rates will be released at a later date according to the USDA.
Earlier this week false reports reported the program would include $2 per bushel to soybean growers, 63 cents per bushel to wheat growers and 4 cents per bushel to corn growers. The administration was quick to call out the report as false and for farmers to not change their late planting decisions based on the report. With today’s announcement, rates will be based off at a county level, with most commodities received one single rate. It was unknown when the counties would have the rates available for producers.