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Ag Industry Pushes for Changes To 2019 Tariff Aid

15:02PM May 16, 2019
Tariff Impact

Tariff Impact( MGN Image )

While few details are available about the aid promised to farmers by President Trump as a result of the escalating trade tensions, this week Secretary Perdue acknowledged the USDA is working on developing the plan. Agriculture industry lobbyists want to see changes made to the previous Market Facilitation Program. 

How payments are calculated. Currently, MFP payments are based on a producer’s recent history of acres planted or prevented from being planted. Industry experts would like to see the formula be based on the higher of actual yields, the APH of the farmer under crop insurance, or the yields used under PLC.

“A different approach to MFP — one based on historical plantings — would help address this issue while also avoiding delays in the MFP,” Pro Farmer’s Jim Wiesemeyer says. “Some in the ag sector say this should also be applied with respect to the 2018 MFP.”

Include indirect impacts of trade disruptions. Currently, MFP considers direct impacts of trade disruptions, some industry experts would like to see indirect impacts, including cross-commodity effects on input costs, considered. “Cross-commodity impacts ought to be compensated under the MFP to ensure that farmers of all commodities impacted, whether directly or indirectly as a result of retaliatory tariffs, receive needed aid,” Wiesemeyer said. “Lenders don't consider if the inability of a farmer to cash flow stems directly or indirectly from ongoing trade disputes, so relief that tempers damages that are caused by lost export markets (and higher input costs due to tariffs on imports) is logical, lobbyists say.”

Increase or omit pay limits. According to Wiesemeyer, the logic is that there are no pay limits on the amount U.S. farmers and ranchers may sell into the export market, so effectively mitigating the loss of these export opportunities would be furthered by omitting any arbitrary limit on help under MFP. 

And while they’re seeking congressional help in making the changes, Wiesemeyer says President Trump has full control of the program. 

“All of the proposed changes (for 2018 and 2019) can be made by the Trump administration. MFP is their creation … created under authority provided by Congress decades ago. At this point, Congress wouldn’t need to act,” a congressional contact told Wiesemeyer. 

Some experts worry an aid payment could adversely affect markets by influencing crops farmers will plant.

“Round II will be interesting to see how payment rates stack up for each commodity. Also, whether they are based on actual 2019 planting or tied to historical base,” a trade policy expert told Wiesemeyer. “I worry that if they are tied to actual or intended plantings, that you could inadvertently distort planting decisions, particularly if details are released soon since so little has been planted to date. $20 billion is a lot of money.”