ANNOUNCED AS TEMPORARYNo
On July 24, 2018 Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) will take several actions to assist farmers in response to the damage done by other countries’ retaliation against U.S. trade measures. Under President Trump’s direction, USDA will “craft a short-term relief strategy to protect agricultural producers while the Administration works on free, fair, and reciprocal trade deals to open more markets in the long run to help American farmers compete globally.” More precisely, USDA will respond to the estimated $11 billion impact of the other countries’ retaliatory tariffs on U.S. agricultural goods by authorizing up to $12 billion in programs that are intended to assist agricultural producers in meeting the costs of disrupted markets.
The administration observes that “a disproportionate amount” of the foreign retaliation “was targeted directly at American farmers,” affecting “a host of U.S. commodities, including field crops like soybeans and sorghum, livestock products like milk and pork, and many fruits, nuts, and other specialty crops.” The USDA announcement also said “there is evidence that American goods shipped overseas are being slowed from reaching market by unusually strict or cumbersome entry procedures, which can affect the quality and marketability of perishable crops.”
The USDA’s response will be based on three programs, namely the Market Facilitation Program, a Food Purchase and Distribution Program, and a Trade Promotion Program. By relying on its existing authorities, the administration appears to have avoided the necessity of seeking congressional approval for its plan.
The Market Facilitation Program, authorized under The Commodity Credit Corporation (CCC) Charter Act and administered by Farm Service Agency (FSA), will provide payments incrementally to producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs. This support will help farmers manage disrupted markets, deal with surplus commodities, and expand and develop new markets at home and abroad.
On August 27, 2018 the USDA announced further details on this aspect of the policy. For each commodity covered, the payment rate will be dependent upon the severity of the trade disruption and the period of adjustment to new trade patterns, based on each producer’s actual production. Interested producers can apply after harvest is 100 percent complete and they can report their total 2018 production. Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income (AGI) for tax years 2014, 2015, and 2016 of less than $900,000. Applicants must also comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations. On September 4, 2018, the first MFP payment periods will begin. The second payment period, if warranted, will be determined by the USDA.
The USDA will make $4,696,300,000 available under this MFP program, the bulk of which ($3,629,700,000) will go to soybean producers. Other supported commodities are cotton, corn, milk, hogs, sorghum, and wheat. The initial MFP payment will be calculated by multiplying 50 percent of the producer’s total 2018 actual production by the applicable MFP rate. If CCC announces a second MFP payment period, the remaining 50 percent of the producer’s total 2018 actual production will be subject to the second MFP payment rate.
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