USDA Issues Details of New Payment Program

August 31, 2018
Kristine A. Tidgren

On August 27, 2018, Secretary of Agriculture Sonny Perdue announced details of new programs designed to assist farmers in response to ongoing trade disputes. USDA will authorize $12 billion for three primary programs:

  • FSA will administer the new Market Facilitation Program to provide payments to corn, cotton, dairy, hog, sorghum, soybean, and wheat producers, beginning as early as September 4, 2018.
  • The Agricultural Marketing Service will administer the Food Purchase and Distribution Program to purchase the unexpected surplus of affected commodities.
  • The Trade Promotion Program is designed to restore lost markets and develop new export markets for U.S. farm products.

Generally, the Market Facilitation Program will make payments to farmers for seven key commodities at the following rates:

Farmers eligible for the payments must:

  • Have an ownership interest in the commodity
  • Be actively engaged in farming
  • Have an average adjusted gross income for tax years 2014, 2015, and 2016 of less than $900,000
  • Comply with Highly Erodible Land and Wetland Conservation Regulations

Eligible producers may apply for a first set of payments after harvest is 100 percent complete and they can report their total 2018 production for the covered commodities. To apply, producers may go to www.farmers.gov/mfp or submit their MFP applications in person, by email, fax, or by mail to their local FSA offices. The first payment period will begin September 4. The second payment period, if warranted, will be determined by the USDA.

The first MFP payment will be determined by calculating one-half of the total 2018 production times the payment rate listed in the above table. The formula is as follows:

Market Facilitation Program Rate x 50% of Total 2018 Actual Production = Payment

The remaining 50 percent of a producer's total 2018 actual production will be subject to a second MFP payment rate, if such payment is deemed warranted by USDA.

MFP payments will be capped per person or legal entity at a combined $125,000 for dairy production or hogs. Payment for dairy production will be based on historical production reported for the Margin Protection Program. 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. Dairy operations are required to have been in operation on June 1, 2018 to be eligible for payments. Payment for hog operations will be based on the total number of live hogs owned on August 1, 2018.

MFP payments will also be capped per person or legal entity at a combined $125,000 for corn, cotton, sorghum, soybeans and wheat.

More information on MFP and other programs relating to the trade dispute can be found here.

CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

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