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Northey Explains Market Facilitation Program
The new Market Facilitation Program (MFP), dubbed trade aid by some, was announced earlier this fall as the president’s way of assisting farmers negatively impacted by escalating trade tensions. Undersecretary of Farm Production and Conservation Bill Northey explained the details and answered questions regarding the program at a recent conference for farmers and agribusiness professionals.
“You heard the president, you heard the secretary, as well, say we’re going to have our farmers’ backs,” Northey reminded the crowd. “It’s not an easy, simple, straightforward process to figure out what that means and how we support folks in the short term to be able to cover some of those losses,” he continued.
Simple, Rapid Response
One of the biggest goals was to make the program simple and something that could be implemented quickly at a time of year when farmers and USDA offices already have a heavy workload. Only crops and livestock that were directly impacted by the tariffs were accounted for. The USDA has said the program must be structured this way in order to be defended at the World Trade Organization (WTO).
As the MFP was developed, USDA economists worked to sort out, “What are those products that had a duty on them and how much was that impact and loss of trade?” Northey explained.
He acknowledged not all impacts of the ongoing trade situation have been captured by the program saying, “I was in North Dakota and you’re in an area that is especially vulnerable to Asian trade, the Pacific Northwest, you see a basis widen, or you’re in another crop. You’re in canola. There was not a duty on canola, but there sure was on soybeans, and so your canola prices are impacted.”
Producers are eligible to apply for the program regardless of whether their 2018 crop is sold or not.
The rates for the first payment established by the USDA are listed below. Payments will be based on half of the farmer’s actual 2018 production.
- Cotton - $0.06/lb.
- Corn - $0.01/bu.
- Dairy (Milk) - $0.12/cwt.
- Pork (Hogs) - $8.00/head
- Soybeans - $1.65/bu.
- Sorghum - $0.86/bu.
- Wheat - $0.14/bu.
The structure of the second payment is expected to be announced in December. Secretary of Agriculture Sonny Perdue said it could be less than originally estimated since an agreement to update NAFTA has been made.
Northey said, so far, he has received positive feedback from USDA office staff and farmers alike. Participants and administrators appreciate that the application is straightforward and easy to explain.
Iowa farmer and American Soybean Association President John Heisdorffer reacted to the program saying, “This will provide a real shot in the arm for our growers, who have seen soybean prices fall by about $2 per bushel, or 20%, since events leading to the current tariff war with China began impacting markets in June. This assistance will be particularly helpful to farmers who didn’t forward-contract their crop earlier this year and who need to arrange financing for planting next year’s crop.”
However, some farmers are concerned the program won’t help enough. Kevin Skunes is the president of the National Corn Growers Association (NCGA). After the details of the MFP were announced, he called the $0.01 per bushel in assistance for corn farmers “disappointing” and “pitiful.” In a statement he said, “This plan provides virtually no relief to corn farmers.” NCGA claims economic analysis they commissioned shows corn prices have dropped by $0.44 per bushel due to the trade disputes.
For more coverage of the Market Facilitation Program check out these Successful Farming magazine articles:
- 15 Questions and Answers on the USDA Trade Retaliation Mitigation Payments
- U.S. Agriculture’s Perdue Says Farmer Aid Could Be Less Than First Estimated
- Second Round of Tariff-Related Aid to Farmers May Come in December - USDA