Farm Policy: Comparison of 2018 and 2019 MFP Programs

Farm Policy: Comparison of 2018 and 2019 MFP Programs

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August 12, 2019
Farm Policy: Comparison of 2018 and 2019 MFP Programs
During 2018 and 2019, the U.S. Department of Agriculture
“trade damaged” commodities, valued at a combined $24.5
(USDA) announced two rounds of trade aid valued at a
billion (Table 1). The MFP outlays are in addition to
combined $28 billion. USDA is using its authority under
USDA’s traditional farm support programs (see CRS In
the Commodity Credit Corporation (CCC) Charter Act to
Focus IF11163, 2018 Farm Bill Primer: The Farm Safety
establish and fund the trade aid packages. The 2018 and
Net). USDA’s Farm Service Agency administers MFP. In
2019 trade aid packages provide both direct and indirect
2019, USDA made several modifications to the MFP
assistance for farmers affected by “trade damage” from
payment structure, including increasing funding, expanding
retaliatory tariffs. For information on the trade aid
the list of eligible commodities, expanding payment limits,
packages, see CRS Report R45865, Farm Policy: USDA’s
and shifting to county-specific rather than commodity-
2019 Trade Aid Package.
specific MFP payment rates to minimize interference with
producer crop choices. Key differences in program
The largest subsidy program under both the 2018 and 2019
provisions of the 2018 and 2019 MFP programs are
trade aid packages is the Market Facilitation Program
described in Table 1.
(MFP), which provide direct payments to producers of
Table 1. Comparison of 2018 and 2019 Market Facilitation Program (MFP) Provisions
Item
2018 MFP
2019 MFP
Funding
Up to $10 billion.
Up to $14.5 bil ion.
Signup
Started Sept. 4, 2018, for all commodities except
Started July 4, 2019. Continues through Dec. 6, 2019,
almonds and sweet cherries which started Sept. 24,
for all commodities.
2018. Initial deadline Jan. 15, 2019, extended to Feb.
14, 2019, due to federal government shutdown.
Payment Rates
USDA estimated the total “direct trade damage"
USDA estimated the total "direct trade damage."b
related to retaliatory tariffs for each affected
Then commodity-specific payment rates were derived
commodity.a Then, each commodity’s trade damage
and used to establish a single per-acre MFP payment
was divided by its 2017 production to determine a
rate for each county—based on historical average
national commodity-specific MFP payment rate.
county planted acres, yields, and crop mixes.
Payments
The national commodity-specific MFP payment rate
For non-specialty crops: a single county payment rate.
for each commodity times a producer’s payment
For dairy, hogs, and specialty crops: separate national
base for each commodity (described below).
payment rates for each. Payment rates are multiplied
by a producer’s payment base (described below).
Payment
Up to two tranches: first started Sept. 27, 2018,
Up to three tranches: first in mid- to late August
Timeline
covering 50% of expected payment; second after
2019 covering maximum of 50% of calculated MFP
Dec. 17, 2018, covering remainder. For late
payment or $15/acre. Possible second in November
harvested crops, a producer could receive the
2019 covering balance up to 75% of calculated
entire payment in a single tranche after Dec. 17,
payment; possible third in January 2020 covering
2018.
remainder.
MFP-Eligible Commodities and Payment Base
Non-Specialty
Corn, cotton, sorghum, soybeans, and wheat.
Alfalfa hay, barley, canola, corn, crambe, dried beans,
Crops
dry peas, extra-long-staple cotton, flaxseed, lentils,
long- and medium-grain rice, mil et, mustard seed,
oats, peanuts, rapeseed, rye, safflower, sesame seed,
small and large chickpeas, sorghum, soybeans,
sunflower seed, temperate japonica rice, triticale,
upland cotton, and wheat.
Payment Base Certified farm-level harvested production of each
Certified total acres planted prior to Aug. 1, 2019, to
crop in 2018.
MFP-payment eligible crops within county, not to
exceed 2018 planted acres. Prevent-plant (PPL) acres
in 2019 not eligible for MFP payments unless planted
to a CCC-authorized cover crop. MFP payments
range from $15/acre up to $150/acre.
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Item
2018 MFP
2019 MFP
Note A farmer must have harvested production of eligible A farmer must have planted acres of eligible crops in
commodities in 2018. Producers must have certified 2019. However, the per-acre payment rate wil not
their 2018 production with USDA’s Farm Service
vary based on which crops are planted. A single
Agency (FSA). Deadline for certification was May
county per-acre payment wil be made on all acres
17, 2019.
planted to eligible crops within each county.
Cover Crops
Cover crops and crops that are grazed in the field
PPL cover crops planted prior to Aug. 1, 2019, with
or used as forage are not eligible for MFP payments. potential for harvest or forage, are eligible for a
$15/acre MFP payment.
Specialty Crops
Fresh sweet cherries, shelled almonds.
Almonds, cranberries, cultivated ginseng, fresh
grapes, fresh sweet cherries, hazelnuts, macadamia
nuts, pecans, pistachios, and walnuts.
Payment Base Certified farm production of each crop in 2018.
Certified 2019 acres of fruit- or nut-bearing plants.
Note Sweet cherries production on a "pack-out" basis.
Exception: ginseng payments wil be based on
Shelled almond production based on total eligible
harvested acres.
kernels as edible meat weight.
Hogs
Per animal (head)
Per animal (head)
Payment Base Certified number of live hogs owned on producer-
Certified number of live hogs owned on producer-
selected day during July 15 to Aug. 15, 2018.
selected day during April 1 to May 15, 2019.
Dairy
Milk (hundredweight or cwt.)
Milk (hundredweight or cwt.)
Payment Base Milk production history reported for Margin
Milk production history reported for Dairy Margin
Protection Program of 2014 farm bil (P.L. 113-79).
Coverage program of 2018 farm bil (P.L. 115-334).
Note Only dairies operating on or prior to June 1, 2018.
Only dairies operating on or prior to June 1, 2019.
Payment Qualifications
Individuals
Eligible applicants must have an ownership interest
Eligible applicants must have an ownership interest in
in the commodity, be actively engaged (AEF) in the
the commodity, be AEF in the farming operation,
farming operation, have an FSA/USDA farm
have a FSA/USDA farm number, and comply with
number, and comply with "highly erodible land and
"highly erodible land and wetland conservation"
wetland conservation" regulations and adjusted
regulations and AGI criteria.
gross income (AGI) criteria.
AGI Threshold
Eligible applicants must have an average AGI for tax
Eligible applicants must have an AGI for tax years
years 2013, 2014, and 2015 of less than $900,000
2015, 2016, and 2017 of less than $900,000 per
per year or a larger AGI but where at least 75% of
year or a larger AGI but where at least 75% of AGI is
AGI is derived from farming, ranching, or forestry-
derived from farming, ranching, or forestry-related
related activities.c
activities.
Payment Limits
MFP payments are capped on a per-person or per-
MFP payments are capped on a per-person or per-
legal-entity basis at a combined $125,000,
legal-entity basis at $250,000, separately, for each
separately, for each category: non-specialty crops,
category: non-specialty crops, specialty crops, and
specialty crops, and animal products (hogs and
animal products (hogs and dairy). However, no
dairy). Overall maximum of $375,000 per applicant.
applicant may receive more than $500,000.
WTO
2018 MFP payments may be notified as product-
2019 MFP payments are likely to be notified as non-
Notificationd
specific Aggregate Measures of Support (AMS).
product-specific AMS.
Source: USDA, “USDA Announces Details of Support Package for Farmers,” press release, July 25, 2019; and FSA, “Market Facilitation
Program,” https://www.farmers.gov/manage/mfp. Specific details of the 2019 MFP payment rate formula are not yet public. For details on WTO
commitments, see CRS Report R45305, Agriculture in the WTO: Rules and Limits on U.S. Domestic Support.
a. Trade data for 2017 (pre-retaliatory tariffs) was compared with trade data for 2018—with retaliatory tariffs by Canada, China, the
European Union (EU), Mexico, and Turkey—using a trade model that adjusted for substitute export supplies and alternate importers.
b. Trade data for a 10-year historical period was compared with 2019 trade data (with retaliatory tariffs by China, the EU, and Turkey).
c. A provision in the 2019 Supplemental Appropriations for Disaster Relief Act (P.L. 116-20) retroactively eliminated the AGI $900,000
threshold for 2018 MFP payments if at least 75% of a farm’s AGI came from farming operations.
d. CRS projections of WTO notifications, not official USDA position. USDA wil likely not notify 2018 MFP outlays until mid-2020 or later.

IF11289
Randy Schnepf, Specialist in Agricultural Policy

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Farm Policy: Comparison of 2018 and 2019 MFP Programs

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