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Dairy received about 2% of initial MFP payments

Progressive Dairyman Editor Dave Natzke Published on 17 June 2019

It will likely be months before the farmers receive payments under a second Market Facilitation Program (MFP). For crop farmers, one of the issues the USDA must work through is the relationship between “prevent plant” crop insurance policies and how they impact MFP payments. Specifics related to the level of payments dairy farmers will receive has also not been announced. (Read: USDA announces new farmer aid package to offset impact of tariffs, dairy details yet to come.)

MFP is one piece of a three-pronged Trade Mitigation Program administered by the USDA to financially assist farmers hurt by ongoing trade wars and retaliatory tariffs. In addition to retaliatory tariffs, actions included the cancellation of supply contracts and other nontariff barriers. Many U.S. farmers lost access to foreign markets, resulting in increased inventories and lower prices of some U.S.-produced commodities.

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The package includes direct payments to farmers under MFP, the purchases of surplus commodities for food banks and other nutrition programs under the Food Purchase and Distribution Program, and funds to develop new export markets under the Trade Promotion Program. (Read: FAQs: Perdue addresses Market Facilitation Program payments and ‘prevent plant’ policy.)

Meanwhile, the American Farm Bureau Federation (AFBF) has “mapped” MFP payments already paid out in the first round of the program. The analysis, compiled by AFBF’s John Newton, chief economist, and Allison Wilton, economic analysis intern, breaks out payments by state and commodity as of mid-May. (Read: Mapping $8.5 Billion in Trade Assistance – Reviewing MFP Payments by Commodity and State.)

The first aid package, announced in 2018, has paid farmers more than $8.5 billion as of May 13 and may potentially pay more given modifications in the recently passed disaster bill. Of that total, dairy farmers received 2% (about $180 million) of all MFP payments, representing an average payment rate of 12 cents per hundredweight (cwt).

The National Milk Producers Federation and the U.S. Dairy Export Council estimated dairy’s losses at $1.5 billion in 2018 due to retaliatory tariffs.

All states received dairy MFP payments, with the top recipients being major dairy states such as California, Wisconsin, New York and Idaho. The total value of payments to dairy farmers in those four states was nearly $91 million, representing 50% of dairy payments.

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AFBF’s Newton and Wilton note that dairy farmers also received federal payments under the Margin Protection Program for Dairy (MPP-Dairy) in 2018 and will receive substantial payments under the new Dairy Margin Coverage (DMC) program in 2019, partially offsetting the lower MFP program payments.

Among other commodities:

  • Payments to soybean producers totaled $7 billion and represented 83% of total payments under the MFP program.
  • Corn producers received a total of $132 million, about 2% of all payments.
  • Cotton producers received payments totaling $471 million, representing 6% of all MFP payments.
  • Sorghum producers received $241 million in payments, representing 3% of total MFP payments.
  • Payments to wheat producers totaled $239.9 million, about 3% of all MFP payments.
  • Payments to hog farmers were approximately $155 million, about 2% of all MFP payments.

One change in the 2019 program is payments for crops will not be based on flat rates for each commodity. Instead, payments will be distributed based on a single-county rate multiplied by a farm’s total plantings to crops in aggregate in 2019. Total payment-eligible plantings cannot exceed total 2018 plantings.

Crops covered under the program have been expanded to include: 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.

Total funding for the MFP program in 2019 is set at $14.5 billion. The 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, the largest of the three, will begin in late July and/or early August, after the USDA Farm Service Agency (FSA) crop reporting deadline of July 15.

Subsequent payments could depend on trade talks with China and, if those talks are successful, those payments could be lowered or eliminated if markets return to normalcy. With no resolution to the trade dispute with China, second and third tranches will be made in November and early January.

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In a separate analysis, the Environmental Working Group (EWG) reported nearly 3,500 farms – including about 110 dairy operations – received $125,000 or more in MFP payments under the 2018 program.  end mark

Dave Natzke
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