How Much Will Your Tariff Payment Be?
USDA on Monday announced details of a $12 billion tariff relief package for agriculture that includes direct payments as well as commodity purchases. According to USDA Secretary Sonny Perdue, the initial round of payments, beginning Sept. 4, are limited to 50 percent of production with the administration holding back on the remaining 50 percent for the time being to see if the trade picture improves. Hog and soybean farmers will benefit from the program the most.
“The timing of this program is tied to the actual harvest time for many crops for farmers and will based on our actual production,” Perdue said during a press call on Monday. “These payments will be bifurcated so that we can monitor and factor in events such as this major [trade] announcement today. Announcements about further payments will be made in the coming months if warranted.”
All three programs, including the Market Facilitation Program were established under the authority of the Commodity Credit Corporation and will be administered by the Farm Service Agency (FSA). According to USDA, the payment rates were determined by the severity of the trade disruption and period of adjustment to new trade patterns and will be based on individual production records. Because of that, producers can only apply after harvest is complete and they can report their total 2018 production.
Payment rates are as follows:
Wheat: 14 cents per bushel on 50% of 2018 production
Sorghum: 86 cents per bushel on 50% of 2018 production
Soybeans: $1.65 per bushel on 50% of 2018 production
Corn: 1 cent per bushel on 50% of 2018 production
Cotton: 6 cents per pound on 50% of 2018 production
Dairy: 12 cents per hundred weight on 50% of MPP production
Pork: $8 per head on Aug. 1 for 50 percent of herd
“These programs both establish new payment limits,” Northey explained. “The crop programs those five commodities cotton, corn, soybean, sorghum and wheat will have one $125,000 payment limit. Dairy and pork together we'll have a separate $125,000 payment limit.”
Northey was quick to point out that those payment limits are separate from existing programs like ARC and PLC.
“What a producer needs to be able to sign up for this program is have current year's production in the case of crops or as I mentioned inventory or historical production for pork and for dairy,” he explained. “They do not need to come in to the to the offices before they have that production evidence.”
It’s also important to note that dairy producers don’t have to participate in the Margin Protection Program to be eligible. According to USDA, the total payments for all seven commodities included in the market facilitation program will total about $4.7 billion.
To be eligible for payments, applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income (AGI) for tax years 2014, 2015, and 2016 of less than $900,000. They also must comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations.
“It’s important to note all of this could go away tomorrow, if China and the other nations simply correct their behavior,” Perdue said. “But in the meantime, the programs we are announcing today buys time for the President to strike long-lasting trade deals to benefit our entire economy.”
Program signup will start September 4.
In addition, USDA will purchase $1.2 billion in surplus commodities for food banks and will invest an additional $200 million in foreign market development.