USDA details trade damage estimates for 2019 MFP payment rates | Michigan Farm News

USDA details trade damage estimates for 2019 MFP payment rates

Category: Crops

by Farm News Media

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For the 2019 trade mitigation programs, USDA employed a longer time-series to estimate gross trade damages, by surveying trends in U.S. bilateral trade over a 10-year period (2009-2018).

A USDA report released today details the level of gross trade damage to U.S. agricultural exports for specific commodities caused by retaliatory tariffs. Those estimates were used to determine the 2019 Market Facilitation Program (MFP) payment rates and the value of commodities to be targeted for purchase under the 2019 Food Purchase and Distribution Program (FPDP).

The USDA report also outlined formulas used to calculate MFP county rates for non-specialty crops, as well as national MFP rates for specialty crops, hogs, and milk to define gross trade damages.

Gross trade damages, defined as the total amount of expected export sales lost to the retaliatory partner due to the additional tariffs, was the basis for developing the 2019 MFP county payment rates.

For the 2019 trade mitigation programs, USDA employed a longer time series to estimate gross trade damages by surveying trends in U.S. bilateral trade over a 10-year period (2009-2018). For some of the commodities affected by tariffs, 2017 was not the most representative base year on which to conduct the trade damage analysis.

2019 MFP Payments and Payment Rates for Non-Specialty Crops

Given the timing of the 2019 Market Facilitation Program (MFP) during the crop year, USDA developed a single rate per acre in each county for MFP-eligible non-specialty crops, which include select non-specialty commodities both directly and indirectly affected by the trade dispute, in order to minimize potential distortions.

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Payments to each producer are limited to:

  • 2018 Farm Service Agency-certified planted acres;
  • 2018 Farm Service Agency-certified prevented from planting acres (of non-specialty crops); and
  • 2018 expiring Conservation Reserve Program acreage.

The specific commodity rates that form the basis of the county rate are derived from the gross trade damage estimates. Commodity rates are set as the estimated trade damages divided by the average volume of production for 2015-17 reported by NASS. The county payment rates per acre are cupped and capped at $15 per acre and $150 per acre, respectively.

Prevent Plant

2019 planting was characterized by substantial rainfall and cool weather that delayed planting of crops across the United States. Producers prevented from planting a 2019 non-specialty crop but who planted a CCC-approved cover crop, with the potential to be harvested, qualify for a $15 per acre payment.

2019 MFP Payments and Payment Rates for Hogs and Milk

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Hogs: 2019 MFP payments for hog producers are based on live hog inventory on a day selected by the applicant between April 1, 2019, and May 15, 2019. Eligibility for 2019 MFP payments is again based upon independent ownership of the hogs; persons/legal entities that are contracted to grow hogs are not eligible for 2019 MFP.

Milk: 2019 MFP payments for dairy producers are based on historical production, the same as what was reported for participation in the USDA Dairy Margin Coverage Program or its predecessor, the Margin Protection Program for Dairy. The ownership share for milk will be as reported to FSA for the aforementioned programs for dairy operations that were in business as of June 1, 2019. Dairy operations that were not in business as of June 1, 2019, are ineligible for MFP.

2019 MFP Payments and Payment Rates for Specialty Crops

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Similar to the 2018 MFP, producers of an expanded list of specialty crops will be eligible for program payments.

2019 MFP payments for specialty crops are based on 2019 acres of fruit or nut-bearing plants.

For specialty fruits, the payment rate is multiplied by the average yields listed on https://www.farmers.gov/manage/mfp.

Total MFP Payments

2019 MFP payments will be provided in up to three installments. The first payment will be guaranteed and is the higher of 50 percent of the total calculated payment or $15 per acre. If the CCC determines that a second payment is warranted, it will be up to 75 percent of the total calculated payment less the amount received in the first payment and the second payment period will begin on November 2019. If the CCC determines that a final payment is warranted, it will be for the remaining amount of the total calculated payment, unless otherwise adjusted by CCC, and the last payment period will begin in January 2020.

For 2019 MFP payments, there will be three separate payment limitations for each person or legal entity:

  1. $250,000 for eligible non-specialty crops;
  2. $250,000 for eligible specialty crops; and
  3. $250,000 for hogs and milk.
  4. No person or legal entity can receive more than $500,000 under 2019 MFP.

Lastly, if the average adjusted gross income of a person or legal entity is greater than $900,000, the person or entity is not eligible to receive an MFP payment unless at least 75 percent of the adjusted gross income of the person or entity is derived from farming, ranching, or forestry-related activities.

The relevant years used to calculate average AGI are the three consecutive tax years immediately preceding the year before the payment year, which will be the crop year, or the marketing year for livestock or dairy. For example, for 2019 the relevant years to calculate AGI are the 2015, 2016 and 2017 tax years.

For more information on the MFP program, please go to https://www.farmers.gov/manage/mfp. Rulemaking and related documents, including the Cost-Benefit Analysis (CBA), for trade mitigation programs can be found at https://www.regulations.gov/docket?D=CCC-2019-0003.