Kristine A. Tidgren
Center for Agricultural Law and Taxation
Iowa State University
The USDA announced on May 23, 2019, that there will be a second Market Facilitation Program in 2019. This comes on the heels of the $12 billion MFP program implemented in 2018. The USDA announcement states that the administration is allocating up to $16 billion for the 2019 program, with up to $14.5 billion of that money used for direct payments to producers. These payments, of course, are intended to compensate U.S. farmers for harm flowing from the ongoing trade dispute with China. The remaining money will purchase surplus commodities affected by trade, and the Food and Nutrition Service will distribute those commodities to food banks, schools, and other groups serving low-income populations.
The announcement does not disclose a number of key details, including the payment rate for each commodity. It does, however, reveal that the 2019 program will differ from the 2018 program in significant way, particularly as to how payments will be calculated. The announcement reveals the following details:
- The payments will be made to 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.
- Here’s the complex, somewhat uncertain part: The announcement states that the payments will not be based upon a producer’s actual production, but on a "single county rate multiplied by a farm’s total plantings to those crops in aggregate in 2019. The per acre payments are not dependent on which of those crops are planted in 2019 and therefore will not distort planting decisions." Farmers must, however, plant to be eligible for assistance. This is complicated by the fact that a number of Midwest fields were impacted by flooding. Many of these farmers have been expected to file prevented planting claims.
- 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.
The announcement states that the 2019 program may include three sets of payments. The need for the second and third potential sets of payments will be evaluated based upon market conditions and trade opportunities. Applications for the first set of payments should begin in late July or early August, as soon as practical after Farm Service Agency releases its July 15 crop reporting. Then if the administration authorizes second and third payments, they would be made in November and early January.
The 2018 MFP payments, which were based on a producer's actual production, significantly impacted Midwestern farmers’ net income. We will continue to monitor the details of this new program. Until payment rates and the details of the county calculations are disclosed, it is unclear exactly how this new program will impact individual farmers.
Note: On June 10, USDA issued this Q & A.
On May 31, CRS published a report outlining the proposed trade aid package.
Reprinted with permissions from ISU Center for Agricultural Law and Taxation