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15 Questions and Answers on the USDA Trade Retaliation Mitigation Payments

The USDA’s Trade Retaliation Mitigation package announced earlier this week will distribute $4.7 billion in cash payments to producers through the new Market Facilitation Program (MFP). The goal of the program is to assist farmers in response to trade damage from unjustified retaliation by foreign nations. 

“Early on, the president instructed me, as Secretary of Agriculture, to make sure our farmers did not bear the brunt of unfair retaliatory tariffs. After careful analysis by our team at USDA, we have formulated our strategy to mitigate the trade damages sustained by our farmers. Our farmers work hard, and are the most productive in the world, and we aim to protect them,” said USDA Secretary Sonny Perdue.

The following are details on the MFP, including what payments will be, who is eligible, and where to apply as provided by the USDA.

1. What commodities are included?

Soybeans, sorghum, corn, wheat, cotton, dairy, and hogs.

2. How many payments will there be?

There is one guaranteed payment with the option for a second. The application period for the first payment starts on September 4, 2018. The USDA may announce a second payment period with a start date in December 2018. The second payment will depend on conditions at the end of the year.

“We will continue to evaluate markets... and the secretary will decide in consultation with the White House on the second round of payments,” said USDA chief economist Robert Johansson, who rejected the idea that a second round is certain.

3. What will the payments be?

The first payment will equal the MFP rate × 50% of 2018 actual production. These are the MFP rates by commodity:

Commodity Initial Payment Rate Est. Initial Payment (in $1,000s)
Cotton $0.06 / lb. $276,900
Corn $0.01 / bu. $96,000
Dairy (milk) $0.12 / cwt. $127,400
Pork (hogs) $8.00 / head $290,300
Soybeans $1.65 / bu. $3,629,700
Sorghum $0.86 / bu. $156,800
Wheat $0.14 / bu. $119,200
Total $4,696,300

If the green light is given for the second payment, it will be calculated using the same formula: MFP rate × 50% of 2018 actual production. However, the MFP rate for the second payment may change from the rate used for the first payment.

4. How will actual production be determined for crops?

The MFP payment will be made after a producer harvests 100% of the crop and provides reliable production records to the Farm Service Agency (FSA). A reliable production record includes copies of receipts, ledgers of income, income statements of deposit slips, register tapes, invoices for custom harvesting, or contemporaneous diaries that are determined acceptable by the FSA county committee.

5. How will actual production be determined for dairy?

The payment for dairy is based off the historical production reported for the Margin Protection Program for Dairy or MPP-Dairy. For existing dairy operations, the production history is established using the highest annual milk production marketed during the full calendar years of 2011, 2012, and 2013. 

6. How will actual production be determined for hogs?

Payment for hog producers will be based off the total number of live hogs on August 1, 2018.

7. Is there a cap?

Yes, the MFP payments are capped per person or legal entity:

  • A combined $125,000 for dairy and hogs
  • A combined $125,000 for corn, cotton, sorghum, soybeans, and wheat

Note that these payments do not count against 2014 Farm Bill payment limitations.

8. How do I know if I’m eligible?

Beyond producing the eligible crops or livestock, producers must meet the following criteria:

  • Have an ownership interest in the commodity and be actively engaged in farming.
  • Have an average adjusted gross income or AGI for tax years 2014, 2015, and 2016 of less than $900,000 per year.
  • Comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions.
  • Have a crop acreage report on file with FSA for the commodity you are requesting a MFP payment for.

9. When do I apply?

For the initial payment, you can apply between September 4, 2018, and January 15, 2019. Remember, 100% of your harvest must be done to complete your application.

10. How do I apply?

Complete the CCC-910 Market Facilitation Program application form. Starting September 4, 2018, that will be available online here.

11. Where do I apply?

You can deliver the form to your USDA service center by fax, mail, or email. Or you can take the completed form to your local FSA office.

12. How much time will the application take?

The application is one page, including front and back. You will provide contact information and information on crops that have been harvested. As you complete harvest for other crops, that can be added to the application. You will also need to sign the form and provide production evidence (examples listed above in question No. 4).

13. What if I haven’t participated in a USDA program?

You’ve got more work to do. Producers who haven’t participated in a USDA program will need to establish farm records. To establish a farm tract number, bring these items to your local USDA service center:

  • Proof of identity such as driver’s license or Social Security number/card
  • Copy of recorded deed, survey plat, rental, or lease agreement of the land
  • Articles of incorporation, estate, or trust documents for entities

14. What else will I have to fill out?

During your visit, you may need to complete or update the following forms:

  • CCC-941 – Reports your average adjusted gross income for programs where income restrictions apply
  • AD-1026 – Ensures a conservation plan is in place before lands with highly erodible soils are farmed, identified wetland areas are protected, and conservation compliance provisions are met
  • CCC-901 – Identifies members of a farm or ranch that is a legal entity

You may also need to complete the following:

  • FSA-578 – Identifies crops, intended and actual uses of the crop, and if the crops are irrigated/nonirrigated (required for MFP crop applications)
  • SF-1199A – Direct Deposit identifies the financial institution you wish to use to receive your MFP payment.

15. Where is this money coming from?

The MFP is established under the statutory authority of the Commodity Credit Corporation (CCC) Charter Act and is under the administration of the USDA FSA. The Charter Act authorizes CCC to assist in the expansion of domestic markets or development of new and additional markets and uses.  

Established during the Great Depression and transferred to the USDA in 1939, the CCC has the authority to make direct payments to U.S. growers when prices are low.

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