Hoeven, FSA chief detail trade aid payouts as 'stopgap' for farmers
FARGO, N.D. — U.S. Sen. John Hoeven, R-N.D., hosting a top U.S. Department of Agriculture official, told farm group leaders the first part in a second major round of $14.5 billion in agricultural trade war aid will be delivered before the end of August.
Hoeven hosted the USDA's Farm Service Agency Administrator Richard Fordyce on Aug. 5.
A room full of agricultural organization officers came to Fargo to hear Fordyce, who later attended a farm visit west of Grand Forks.
The Trump administration has launched "MFP 2.0" — shorthand for Market Facilitation Program for the 2019 crop — similar to payments for the 2018 crop, but using a different formula to determine the payments. It is designed to offset retaliation as the administration has increased tariffs on China and others, including another 10% tariff on another $300 billion of Chinese goods. The night before, the situation got worse with China announcing it would devalue its currency and it has either cut back or halted purchases of U.S. agricultural commodities. Devaluing currency tends to offset tariffs for goods sold to America, while further discouraging imports of commodities and could lead to more retaliation.
Fordyce, himself a Missouri farmer, said the payments are a "stopgap" measure until the Trump administration is successful in righting trade relationships with China and others. He acknowledged farmers are "hurting," but said they are "terribly resilient."
Nationwide, farmers in the MFP 2.0 round will be eligible for $15 to $150 an acre, based on a formula, and varying by county.
In Minnesota, rates vary from $29 to $73 per acre; North Dakota $15 to $60 per acre; South Dakota $15 to $69 per acre; and Montana, $15-16 per acre. Payments will be heavily weighted to soybean and soybean products but will be made for most crops except sugar beets and potatoes.
Tommy Grisafi, an ag risk management adviser at Advance Trading, Inc., Mayville, N.D., said his clients are "scared, concerned."
"As markets tumble, the government gives you this money. The question going to be asked is, 'Is it safe to assume every time times get tough they're going to give us a payment?' It's enabled people to stop marketing grains," he says, adding later that some farmers will make money through increased yields and advanced marketing.
Fordyce said signup for the payments started July 29 and runs through Dec. 9. He said it has been full steam ahead, with some glitches, including land operation and ownership that is different in 2019 than in 2018.
Hoeven said he'll be paying attention that North Dakota farmers are treated fairly if there are market recoveries due sales in markets other than China — sales that could advantage farmers in Iowa or other states ahead of North Dakota. "If they're moving beans and we're not, that creates our basis," Hoeven said.
Randy Melvin, president of the North Dakota Corn Growers Association, asked for clarifications about how some farms will be handled when they shift among years, sometimes going from share-rent to cash rent. Some said there is some confusion regarding eligibility for payments for farms that involve sugar beets and potatoes and neither are covered under MFP 2.0.
Fordyce declined to say exactly how the payment rate for counties were determined, except that it was complicated, and said he didn't know how "basis" differences — the difference between local markets and national trade centers due to transportation and other factors — were counted.
An earlier MFP payment round was made for 2018 crops, primarily because of Chinese retaliatory tariffs on soybeans for U.S. tariffs on other goods. The USDA initially paid out $4.7 billion in MFP in September 2018, followed by installments totaling $7.7 billion by February 2019. Farmers were paid $1.65 per bushel for soybeans and 1 cent per bushel on corn.
The first MFP round paid out about $40 million to North Dakota, said Brad Thykeson, state executive director for the FSA. He said the MFP 2.0 is likely to pay more in the state, but said that will be determined by many things, including whether the second- and third-round payments will be made in December and January.
Trump has imposed tariffs on an array of Chinese goods in moves initiated in the spring of 2018. Since then, Chinese imports of U.S. grains, especially soybeans, have dropped off. North Dakota is among the most affected regions because about 75% of the state's soybean crop has usually been exported via rail to Pacific Northwest ports, much of that bound for Asia.
Dairy farmers in business as of June will receive about 20-cent per hundredweight of production, based on history. Hog producers will be paid $11 per head, based on the number of live hogs owned on a day chosen by the farmer between April 1 and May 15.