U.S. Farm Aid Program Update – Aug ’18
The U.S. Department of Agriculture recently announced details on the farm aid program that will include an initial $4.7 billion in direct payments to farmers to help offset losses from retaliatory tariffs on U.S. agricultural exports. Direct payments will be made to U.S. soybean, pork, cotton, sorghum, dairy, wheat and corn producers through the USDA Farm Service Agency (FSA) Market Facilitation Program (MFP). Of the $4.7 billion in direct MFP payments, it is estimated that a $127 million share in payments will be allocated to dairy producers. Payments for dairy production are based off the highest annual milk production marketed during the full calendar years of 2011, 2012 and 2013. Initial payment rates are calculated by multiplying 50% of the producer’s actual production by the applicable MFP rate for each commodity. The MFP initial payment rate for dairy producers is set at $0.12/cwt. Signup for the program will begin September 4th at USDA FSA offices and run through the end of Jan ’19. Eligible participants must have an ownership interest, be actively engaged in farming and have an adjusted gross income of less than $900,000 for years 2014, 2015 and 2016. MFP payments will be capped per person or legal entity at a combined $125,000 for dairy production. Dairy operations are required to have been in operation on June 1, 2018 to be eligible for payments. Over three quarters of all direct MFP payments are expected to be made to soybean producers. China has traditionally bought approximately 60% of U.S. soybean exports. MFP estimated initial payments allocated to dairy producers account for just 2.7% of all currently available funds. USDA also plans to spend $1.2 billion in commodity purchases including dairy products and distribute them to food banks. Dairy product purchases are expected to amount to $85 million, or 6.9%, of all commodity purchases. An additional $200 million in funds will be used to develop new export markets for agricultural commodities. Additional MFP direct payments may be made to agricultural producers based on trade developments over months to come. If a second MFP payment period is announced, the remaining 50% of the producer’s actual production will be subject to the MFP payment rate.