U.S. Secretary of Agriculture Sonny Perdue has announced that USDA will take several actions to assist farmers in response to trade damage from retaliation and trade disruptions. Up to $16 billion will be available for direct payments to farmers, commodity purchases and promotion programs. $14.5 billion will be spent on direct payments, with $1.4 billion being used for food purchase programs and $100 million for new export market promotion programs. Foreign donations of commodities are not part of this effort. Funds for this program will come from the Commodity Credit Corporation (CCC).
Payments will be based on a single county rate multiplied by a farm’s total planting of those crops in aggregate in 2019. USDA says that payments will be sent to farmers in three phases: the first payment in late July or early August; if conditions warrant, the second and third payments will be made in November and early January. Program payments will not be paid on prevented planted acreage.
Per acre or per unit payments are expected for hogs, dairy, tree nuts, fresh sweet cherries, cranberries and fresh grapes.
The purpose of these payments is to help farmers absorb some of the additional costs of managing disrupted markets, to deal with surplus commodities, and to expand and develop new markets at home and abroad. Payments will be made in up to three tranches, with the second and third tranches evaluated as market conditions and trade opportunities dictate. The first tranche will begin in late July/early August as soon as practical after Farm Service Agency crop reporting is completed by July 15th. If conditions warrant, the second and third tranches will be made in November and early January.
Overview of Payments and Programs:
- Producers of alfalfa hay, barley, canola, corn, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, upland cotton, and wheat will receive a payment based on a single county rate multiplied by a farm’s total plantings to those crops in aggregate in 2019. Those per acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions. Moreover, total payment-eligible plantings cannot exceed total 2018 plantings.
- Dairy producers will receive a per hundredweight payment on production history and hog producers will receive a payment based on hog and pig inventory for a later-specified time frame.
- Tree nut producers, fresh sweet cherry producers, cranberry producers, and fresh grape producers will receive a payment based on 2019 acres of production.
Additionally, CCC Charter Act authority will be used to implement a $1.4 billion Food Purchase and Distribution Program (FPDP) through the Agricultural Marketing Service (AMS) to purchase surplus commodities affected by trade retaliation such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk for distribution by the Food and Nutrition Service (FNS) to food banks, schools, and other outlets serving low-income individuals.
Finally, the CCC will use its Charter Act authority for $100 million to be issued through the Agricultural Trade Promotion Program (ATP) administered by the Foreign Agriculture Service (FAS) to assist in developing new export markets on behalf of producers.
This package will provide some relief to our farmers as they continue to weather the trade disruptions and will assist in their dealings with their financial institutions, however, we cannot overstate the dire consequences that farmers are facing in relation to lost export markets. The mitigation package helps, but our emphasis continues to be on free trade and restoring markets, and we will continue to push for a swift and sure end to the trade war and the tariffs impacting American agriculture.
Further details regarding eligibility and payment rates will be released by USDA at a later date.