The USDA is preparing to roll out another $16 billion in aid to farmers hurt by the Trump administration’s trade war with China, with payments to begin this month.
The second round of tariff-aid payments will give time for the president to strike trade deals, USDA Secretary Sonny Perdue said on a conference call July 25 that gave details of the new package.
The aid uses similar damage criteria as last year’s $12 billion payments. But rather than payments based on crop type, the new program sets a per-county rate based on the blend of crops grown in the area of $15 to $150 an acre.
Producers can go to https://www.farmers.gov/manage/mfp to look at specifications for crops and livestock as well as county-average rates. Registration for payments will begin July 29.
Examples of Illinois county-average rates for non-specialty crops.
The minimum rate is $15 per acre, with a maximum of $150 per acre:
“What is different is we looked at trade over the past 10 years and looked at the maximum of what trade could have been,” said Rob Johannson, USDA’s chief economist. “We considered which year reflected the largest amount of trade. As a result, we do get a larger amount of damage.”
The new numbers reflect that retaliatory tariffs from Mexico and Canada have been removed, but China and India have increased tariffs.
“One of the reasons we looked at more than one year was we heard from corn growers they didn’t export very much to China in 2017 because China was already preventing U.S. corn being shipped to China. So we looked at previous years when China did import much more corn,” Johannson said.
Non-specialty crops such as corn and soybeans will be paid with a county-specific all-crops-average rate, regardless of the non-specialty crop planted by the producer. The minimum rate will be $15 per acre, with a maximum of $150 per acre. Johannson said the average rate was created in an attempt to not distort planting decisions.
“It’s agnostic to the type of crop planted. Corn will receive the same rate as wheat, barley, etc.,” he said. “(But) each county will be different. The FSA will develop average production levels for each of those crops to calculate a damage estimate.”
The procedure is good for producers planting the major crop in a county, but does not work as well for a producer planting a different crop.
“There are going to be some misalignments in the program,” said Brandon Lipps, acting USDA deputy undersecretary. “One example is … if you have a producer who was in a wheat county, but decided to grow cotton, that producer will not be as well-served by this program.”
Dairy and hog producers are part of a third group. Dairy will be paid at 20 cents per hundredweight. Hog producers will be paid $11 per head based on inventory between April 1 and May 15, 2019.
First payment in August
The trade-aid payments will be paid in three parts. The first, estimated to be in mid- to late-August, will be for 50% of the aid due — unless the amount due is less than $30. Those producers will receive $15 per acre, the minimum payment.
The second and third payments are not guaranteed. They are based on the status of trade talks and if a producer still needs the aid. If they are made, the second payment will likely be about 25% of what is owed to the producer; it is likely to be made in fall 2019. The third payment for the remaining amount due will likely be made in winter 2019-20.
“There were a number of issues this spring that made this job a little more difficult,” Johannson said. “We know producers had more difficulty in exporting their products. We know we have a large number of soybeans in storage right now. We want to help producers mitigate the effects of the very damaging trade retaliations. And we want to maintain our commitment to (World Trade Organization) agreements.”
The USDA still doesn’t have prevent-plant numbers.
“We still are working on estimates for prevent plant; we know it’s at historic levels,” he said.
Producers affected by natural disasters who filed prevented-
planting claims and then planted a trade-aid-eligible cover crop, with the potential to be harvested or for subsequent use as forage, qualify for a payment of $15 per acre. Acreage of cover crops must be planted by Aug. 1, 2019, to be considered eligible for payments.
Producers need to contact FSA offices with the number of acres planted to qualifying crops.
USDA undersecretary Bill Northey said there will be payment limitations of $250,000 per person or legal entity. Payment will be limited to $500,000 across all categories, which is more than in 2018. The adjusted-gross-income limit will be at $900,000 unless more than three-fourths of that income comes from agriculture, which is a change to the 2018 procedure. In that case there is no gross-income limit.
“We had some folks who couldn’t participate in 2018,” Northey said. “They will have that chance now if they meet the ‘three-fourths income from agriculture.’
“A producer needs to have crops planted. We would expect everyone who participates to have an interest in a growing crop. They might have an off-farm job — we have a lot of that. They may have an interest in another business. But there must be an acreage crop report filed.”
There are no plans for trade aid in 2020.