The Agriculture Department overhauled the Market Facilitation Program to broaden the number of farmers that would receive aid, but officials are likely to encounter new grumbling over the wide disparities in payment rates.
“We knew there would be some wide disparities in counties that were close to each other and … (USDA) recognized that. That’s why they put the floor (rate of $15 per acre) in to make sure that it would minimize some of the angst,” House Ag Committee ranking Republican Mike Conaway, R-Texas, told Agri-Pulse.
“It’s my guess that each one of (the farm groups) will have folks that are really, really happy and folks who are generally disappointed because they didn’t get higher payments,” Conaway said.
Farm groups generally cheered the release of the new round of MFP payments, designed to offset the impact of the ongoing trade war with China, but congressional Democrats immediately criticized the sharp differences in county rates announced Thursday.
The rates are based on the mix of crops that each county historically produces as well as USDA's calculation of the impact on each commodity of unfair trade practices over the past 10 years. The county rates vary from a minimum of $15 an acre to $150 an acre.
For a map of the county rates, click here.
“These short-term, inequitable payouts are not a replacement for markets and a coherent trade strategy,” said Debbie Stabenow of Michigan, the ranking Democrat on the Senate Agriculture Committee. She said the latest version of MFP “only confirms my previous concerns that this aid is not equitable and favors certain farmers over others. Bottom line — it’s not fair."
Midwest producers who were unable to plant their normal crops because of the constant storms this spring also will likely see lower payments since they will only qualify for a minimum $15-an-acre payment on their prevent plant acres, a payment they will only receive if those acres are seeded to cover crops.
“I would not want to be a Congress person having to explain to a farmer that had to take PP (prevent plant insurance benefits) due strictly to Mother Nature that they get $50-$60 per acre less support. Good luck with that!” University of Illinois economist Scott Irwin said in an analysis of the package that he posted on his Twitter feed.
Payments under last year's version of MFP were tied to a farmer’s 2018 production of a limited number of crops that USDA believed were harmed by retaliatory tariffs. The highest payment rate by far, $1.65 per bushel, was for soybeans. Cotton growers received 6 cents per pound, wheat growers 14 cents per bushel and corn producers one cent per bushel.
National Farmers Union President Roger Johnson, reacting to the new version of MFP, said his group has “some concerns about disparities in payments from county to county, which could put some farmers at a financial disadvantage.”
House Agriculture Chairman Collin Peterson, D-Minn., said he expected the disparities in county rates but wasn’t certain how farmers would respond. “At the end of the day farmers need money and I’m not going to complain,” he told Agri-Pulse.
Some of the largest per-acre payments will go to counties, including some in Conaway’s district, that are dominated by cotton production. No counties in Ohio, Indiana, Illinois, Iowa, Nebraska, Minnesota, and the Dakotas have payment rates above $100 an acre, but Texas and Georgia have 35 and 51 respectively.
Rates also vary significantly by county. On the southern Plains in Texas, where cotton is the dominant crop, the MFP rate is $145 in Lubbock County but $114 in neighboring Hale County to its north and $124 in Lynn County to its south.
Agriculture Secretary Sonny Perdue, speaking about the major differences between the minimum payment rate of $15 per acre and the maximum of $150 for farmers in different counties, said USDA did the best it could with its resources and time.
“The minimum and the maximum payments were an attempt to equitably distribute the funds,” Perdue said, but also acknowledged that “there are going to be some misalignments probably in this program somewhere …”
For example, he said, a farmer of a commodity that was not affected sharply by Chinese tariffs in a county where the predominant crop was significantly affected, could benefit from the MFP disproportionately. And the opposite could happen.
Soybean farmers, who have borne the brunt of China's retaliatory tariffs, are expected to still do relatively well under the new MFP. American Soybean Association President Davie Stephens said that’s how it should be, even though some may be in counties with lower payment rates.
“The county rate for farmers in areas with a higher percentage of crops suffering from negative trade impacts will receive a higher offset for the damages we have seen because of the tariffs,” he said. “We appreciate the Administration’s effort to determine how the payments will work and hope our soybean growers — no matter where their farms are and what is planted there — feel some relief from this assistance.”
Corn farmers, who were generally disappointed in the penny per acre they got in the last MFP, did better this time around after USDA looked back at Chinese corn imports over the past decade to calculate damages.
China was a major importer of U.S. corn before 2013, when the country said it found traces of Syngenta's Viptera corn — a biotech trait that had been approved in the U.S. and elsewhere, but not China — in shipments from the U.S. Over the following two years China rejected about 2 million tons of U.S. corn after repeatedly claiming to find minute levels of Viptera.
China wasn’t importing much corn at all in 2017, said USDA Chief Economist Robert Johansson, “because China had already been putting in place various non-tariff measures that were preventing U.S. corn from being shipped to China. So, when we looked back over 10 years, we see that in previous years, China did import quite a bit of corn from the United States.”
National Corn Growers Association President Lynn Chrisp said in a statement Thursday: “While NCGA’s focus remains on markets, we welcome USDA’s quick rollout of MFP 2.0 and the Department’s creative efforts to reorient MFP to better reflect market impacts and support American farmers. We look forward to learning more about how MFP will work for corn farmers.”
The chairman of the National Cotton Council, Alabama farmer Mike Tate, welcomed the payments his growers will get, noting that cotton futures prices have fallen by 30 cents per pound since the trade war with China began a year ago, costing producers about $250 an acre in revenue.
The drop is “due in large part to cotton sales to China being substantially below the level that was expected in absence of tariffs,” Tate said.
Although there have been press reports of recent possible cotton purchases by China, they won’t be enough given the rising stocks and U.S. production, he said.
U.S. farm groups are united in their desire to see the U.S-China trade war come to an end and the withdrawal of Chinese tariffs.
“While we are grateful for the continuing support for American agriculture from President Trump and Secretary Perdue, America’s farmers ultimately want trade more than aid,” said Zippy Duvall, president of the American Farm Bureau Federation. “It is critically important to restore agricultural markets and mutually beneficial relationships with our trading partners around the world.
National Association of Wheat Growers President Ben Scholz said the new “MFP payments will provide necessary assistance to growers impacted by low prices resulting in part from tariffs.
“However, this is a band-aid when we really need a long-term fix. NAWG understands holding China accountable for its WTO violations and unfair trade practices but a trade war is not the solution especially when farmers are the casualties.”
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