By RACHEL LANE
WASHINGTON, DC — The USDA announced a second round of Market Facilitation Program, MFP, payments, days after Senate Democrats released a report about concerns regarding 2019 payments.
Payments are scheduled to begin this week. Producers eligible for MFP payments will receive 25 percent of the total expected payment for eligible commodities. The USDA reported this is in addition to the 50 percent of total expected payment producers have already received this year.
“This second tranche of 2019 MFP payments, along with already provided disaster assistance, will give farmers, who have had a tough year due to unfair trade retaliation and natural disasters, much needed funds in time for Thanksgiving,” said USDA Secretary Sonny Perdue.
In addition to the report, 17 Senators signed a letter to Perdue asking him to address the inequities in the trade payments. Three days later, the new round of payments were announced.
The report was released by a group led by Sen. Debbie Stabenow, D-Mi, ranking member of the US Senate Committee on Agriculture, Nutrition and Forestry, and Senate Democratic Leader Chuck Schumer, D-NY. The report questions the procedure used to determine the MFP payments and addressed three specific concerns: the percentage of top tiered payments payed to five southern states, payments to wealthy farmers and foreign owned companies, and failing to recover market access.
Stabenow has questions about the formula used to determine the payments during senate agriculture hearings and asked to receive a copy of the formula.
The USDA has not released the formula, even after multiple requests from different sources, said Roger Johnson, president of National Farmers Union, NFU.
The report finds that 95 percent of the top tiered payments are being sent to five southern states, a region of the country that has been damaged by the tariffs less than the northern and western parts of the country.
When asked, a USDA spokesperson said the MFP payments are based on trade damage, not based on region or farm size.
“More than 560,000 farmers across the United States have received payments under the 2019 MFP program” the spokesperson said. The Midwest region received more than 60 percent of the funds. The states that received the most funds are Illinois, Iowa, Kansas, Nebraska and Minnesota.
“While we appreciate feedback on this program, the fact of the matter is that USDA has provided necessary funding to help farmers who have been impacted by unjustified retaliatory tariffs... We welcome constructive feedback from any member of Congress with recommendations as to how the program could be better administered,” the spokesperson said.
Johnson said both the figures in the report and the figures by the USDA are correct. The difference is the Midwest states have higher yields and more acres planted with impacted crops.
“In my opinion, there’s a very legitimate concern about how the USDA implemented the program,” Johnson said. “It would be really helpful if you have the actual formula… We may not know how (payments) were calculated but we do know where they went.”
He said of the top tier of payments, $100 or more per acre, 95 percent were awarded to southern states. When looking the places with the most damage from the trade war, the states were in the north, Midwest and western part of the country.
Adding to the confusion, the 2019 program is a very different program than the 2018 program and resulted in very different payments. The USDA has said that the formula is based on ranking the trade damage to 15 or 20 crops. It completely ignores specialty crops, with fewer farmers. California, a large farming state, received low payments because the specialty crops didn’t get weighed properly, Johnson said.
“Specialty crop farmers saw their markets evaporate,” Johnson said.
The 2018 Farm Bill had some restrictions in place for the crop insurance and Title 1 programs - the farm safety net. Johnson said the MFP has more money involved than crop insurance and Title 1 put together, but the USDA is ignoring the restrictions congress put in place to guide payments for crop insurance and Title 1.
“It’s a lot of money and it’s being spent dramatically different than it would be if it was in Title 1 or crop insurance,” he said.
The caps put restriction on what could be awarded through farm bill programs and the USDA doubled the amount for the MFP program to $250,000 per person, Johnson said.
Since the USDA removed the AGI restrictions, JBS, a Brazilian company, qualified for for MFP payments.
JBS received about $90 million in four commodity purchase payments in 2019, the report states.
JBS is known for poor treatment of farmers, Johnson said. The company has been taken to court on multiple occasions for its business practices.
He said the MFP payments have direct to farmer payments and indirect payments where the crop or product was purchased and donated to a food pantry. JBS received most of the funds through indirect payments. If pork is purchased, the money doesn’t go to the farmers, but to the processor - in this case, JBS. The assumption is that the processor will pay the farmers more for the hog, he said, but this method relies on the company to distribute the money to farmers.
Wealthy farmers are also benefiting from changes the USDA made for the MFP payments, Johnson said.
According to the USDA website, the 2014 Farm Bill set caps on adjust gross income, AGI. Farmers that made more than $900,000 AGI for the three previous tax years would not be eligible for program payments.
The AGI is the income minus all related expenses. Johnson said a farm with $1 million in sales would have 10-20 percent in AGI. A farm with a $900,000 AGI would have almost $100 million in sales.
The USDA removed the AGI cap from the MFP and the billionaire governor of West Virginia earned the highest tier MFP payment in 2018, he said.
Johnson said he also has concerns about regaining market access. The Chinese government has offered assistance to Brazil to build the infrastructure and plant more soybeans. When the trade war ends, that surplus of soy isn’t going to disappear.
In the meantime, the US has become an unreliable trading partner, Johnson said. Countries are less likely to rely on the US for food than they were a few years ago and Johnson thinks it may take years before the trust is rebuilt.