On July 25, USDA announced the details for the $16 billion trade assistance package for farm operators.

A total of $14.5 billion, the largest portion of the aid package, is designated as direct payments to farmers in the form of market facilitation program (MFP) payments.

The MFP payments are being made to offset the financial losses incurred from the impacts of ongoing trade situations with China, Mexico, Canada and other countries.

This is the second year that farmers have been eligible for MFP payments. In 2018, approximately $8.5 billion was paid to farmers. Soybean producers received the largest payments at $1.65 per bushel, with wheat producers receiving $.14 per bushel, corn producers receiving only $.01 per bushel. Many commodities received no payment.

This year, the MFP program will be based on total planted crop acres and will include a wider range of commodity crops.

Following is a brief is a brief summary of the details for 2019 MFP payments to farmers:

• Sign-up for the MFP program go through Dec. 6 at local USDA Farm Service Agency offices. Farmers must have certified their crop acres earlier at the FSA office. 

• Corn, soybeans, wheat, alfalfa hay, barley, canola, crambe, dried beans, dry peas, extra-long staple cotton, flaxseed, lentils, long and medium grade rice, millet, mustard seed, oats, peanuts, rapeseed, rye, safflower, sesame seed, small and large chickpeas, sorghum, sunflower seed, temperate japonica rice, triticale, and upland cotton are eligible for payments.

• Payments will be based on the total planted acres to those crops on a given farm. The total acres eligible for payments can not exceed the amount of eligible crop acreage that a farmer planted in 2018, except for any acres added via purchase, land rental contracts, family arrangements, and so on. This does not include converted CRP acres.

• 2019 prevented planted crop acres will be eligible for minimal MFP payments ($15 per acre), provided that an eligible cover crop was seeded by Aug. 1. Prevent plant acres that are not planted to a cover crop are not eligible for MFP payments.

• Payments will be paid on a single county payment rate that was calculated based on the historical crop mix and production level in a county, as well as the likely negative financial impact that resulted from the added tariffs and negative trade situation.

County payment rates range from $15 to $150 per acre, with the highest payment rates going to some counties in southern states that have high cotton production. Payment rates in the Midwest were lower, with county rates averaging about $55 per acre in Minnesota, $66 in Iowa, and $69 in Illinois.

In Minnesota, county payment rates ranged from $15 per acre in St. Louis County to $79 per acre in Hubbard County. In Iowa, payment rates range from $43 per acre in Dubuque County to $79 per acre in Cherokee County. Most counties in southern Minnesota and northern Iowa have payment rates from $60 to $75 per acre.

• Payments will be made in three rounds, with the first payment likely to be in August. The second and third payments are not guaranteed. If these payments occur, they will likely be made in November and January 2020, based on an evaluation of continuing trade-related impacts .

• The first  payment will be the higher of 50% of the county payment rate or a minimum of $15 per acre. For example, a producer in a county with a payment rate of $60 per acre would receive an initial payment of $30 per planted acre, while a producer in a county with a payment rate of $25 per acre would receive an initial payment of $15 per acre. 

• If warranted, the remaining 50% or the balance of the payments would be made in the final two payments. 

• Hog producers will qualify for payments of $11 per hog owned on a specified date between April 1 and May 15 (producers select the date). Half of the payment will be paid in the first round of payments.

• Dairy producers that were in business on June 1 can get  a payment of $.20 per hundredweight (cwt.), based on their production history. Again, half of the eligible payment will be made in the first round of payments. 

• There is a payment limit of $250,000 per person or legal entity for crop payments, and a separate $250,000 limit for hog and dairy producers, as well as for producers of the specialty crops. No individual or entity can receive more than $500,000 in total MFP payments. In addition, producers must have an average adjusted gross income of less than $900,000 for the 2014, 2015 and 2016 tax years to be eligible.

Kent Thiesse is a farm management analyst and senior vice president at MinnStar Bank, Lake Crystal, Minn.

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