USDA issues third tranche of 2019 MFP payments
Just days after President Trump signed the revised North American Free Trade Agreement (USMCA) and 'Phase One' of the China trade deal, fulfilling a key campaign promise, he directed the issuance of the third and final tranche of 2019 Market Facilitation Program (MFP) payments this week.
The $3.6 billion in payments are aimed at assisting farmers suffering from damage due to trade retaliation and should begin to show up in farmers’ bank accounts shortly, said U.S. Agriculture Secretary Sonny Perdue.
"It’s been a great start to 2020 for American Agriculture with the signing of the historic Phase One Deal with China and the signing of USMCA,” said Secretary Perdue in a news release. “While these agreements are welcome news, we must not forget that 2019 was a tough year for farmers as they were the tip of the spear when it came to unfair trade retaliation."
Release of the third tranche of MFP payments designed to mitigate the pain of the retaliatory tariffs brings the total paid out to farmers for 2019 production losses in 2019 to $14.5 billion. Producers also received $8.6 billion for 2018.
According to federal data, Wisconsin producers received $260 million in MFP payments so far.
Perdue said the release of funds was proof the Trump is following through on his "promise to help and support farmers as he continues to fight for fair market access just like he did with China.”
The “Phase One” agreement, the product of months of negotiations between officials in Washington and Beijing, calls for China to boost its purchase of U.S. goods and services by $200 billion over the next two years, including $32 billion worth of agriculture products.
While farm groups across the country heralded the signing of the 'Phase 1' trade deal with China as a "game changer" and "step in the right direction", the escalating health crisis in China may delay the start date of the deal which is supposed to take effect in mid-February.
According to Bloomberg News, the deal contains a clause that states the U.S. and China will consult "in the event that a natural disaster or other unforeseeable event" delays either from complying with the agreement. There is no word yet that China has formally requested a consultation yet.
According to the USDA, payments will be made by FSA under the authority of CCC Charter Act to producers of alfalfa hay, barley, canola, corn, crambe, dried beans, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, millet, mustard seed, oats, peanuts, rapeseed, rye, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, triticale, upland cotton, and wheat.
MFP assistance for these non-specialty crops is based on a single county payment rate multiplied by a farm’s total plantings of MFP-eligible crops in aggregate in 2019. Those per-acre payments are not dependent on which of these crops are planted in 2019. A producer’s total payment-eligible plantings cannot exceed total 2018 plantings. County payment rates range from $15 to $150 per acre, depending on the impact of unjustified trade retaliation in that county.
Dairy producers who were in business as of June 1, 2019, will receive a per hundredweight payment on Dairy Margin Coverage (DMC) production history, and hog producers will receive a payment based on the number of live hogs owned on a day selected by the producer between April 1 and May 15, 2019, the USDA reported.
MFP payments will also be made to producers of almonds, cranberries, cultivated ginseng, fresh grapes, fresh sweet cherries, hazelnuts, macadamia nuts, pecans, pistachios, and walnuts. Each specialty crop will receive a payment based on 2019 acres of fruit or nut bearing plants, or in the case of ginseng, based on harvested acres in 2019.
Acreage of non-specialty crops and cover crops had to be planted by August 1, 2019 to be considered eligible for MFP payments.
Per-acre non-specialty crop county payment rates, specialty crop payment rates, and livestock payment rates are all currently available on farmers.gov.
This is the final of three tranches of MFP payments. The first tranche was comprised of the higher of either 50 percent of a producer’s calculated payment or $15 per acre, which may reduce potential payments to be made in tranche three. The second tranche was 25% of the total payment expected, in addition to the 50% from the first tranche.
MFP payments are limited to a combined $250,000 for non-specialty crops per person or legal entity, according to the USDA. MFP payments are also limited to a combined $250,000 for dairy and hog producers and a combined $250,000 for specialty crop producers. However, no applicant can receive more than $500,000. Eligible applicants must also have an average adjusted gross income (AGI) for tax years 2015, 2016, and 2017 of less than $900,000 unless at least 75 percent of the person’s or legal entity’s AGI is derived from farming, ranching, or forestry related activities. Applicants must also comply with the provisions of the Highly Erodible Land and Wetland Conservation regulations.
According to American Farm Bureau Federation Chief Economist John Newton, the third tranche represents 25% of the MFP payments for livestock and specialty crops. For non-specialty crops and based on the county-level payment rates and the method by which the first two tranche payments were made, it’s estimated that $3 to $3.5 billion in support remains available.
The county-level payment rates would range from 75 cents per acre to $37.50 per acre, with some counties already exhausting their MFP eligibility through the first two tranche payments, i.e., any counties with an original MFP payment rate of $20 or less. If the payments were made, a majority of the tranche 3 payments would be distributed to farmers along the Mississippi and across the Corn and Cotton belts.
"Many producers were affected by natural disasters this spring, such as flooding, that kept them out of the field for extended periods of time," Newton said. "Producers who filed a prevented planting claim and planted an FSA-certified cover crop, with the potential to be harvested qualify for a $15 per acre payment. Acres that were never planted in 2019 are not eligible for an MFP payment."
In June, H.R. 2157, the Additional Supplemental Appropriations for Disaster Relief Act of 2019, was signed into law by President Trump, requiring a change to the first round of MFP assistance provided in 2018. Producers previously deemed ineligible for MFP in 2018 because they had an average AGI level higher than $900,000 may now be eligible for 2018 MFP benefits. Those producers must be able to verify 75 percent or more of their average AGI was derived from farming and ranching to qualify. This supplemental MFP signup period will run parallel to the 2019 MFP signup, from July 29 through December 6, 2019.
The USDA has not responded to whether or not there would be a version of MFP in 2020.
The USDA contributed to this report. For more information on the MFP, visit www.farmers.gov/mfp or contact your local FSA office, which can be found at www.farmers.gov.