By Will Snell, Todd Davis, and Kenny Burdine
UK Economic and Policy Update – July 2019
USDA has announced the specific details regarding the latest round of Market Facilitation Payments (MFP) totaling up to $14.5 billion of direct payments to eligible farmers. These payments are in response to the estimated adverse impact that U.S. farmers are experiencing related to retaliatory tariffs and other non-tariff barriers being assessed during the on-going trade dispute. This new round of trade mitigation payments following $9.6 billion of payments allotted last year which was distributed in two different sets of payments. According to Kentucky’s Farm Service Agency (FSA), Kentucky farmers received over $150 million during for the first two sets of MFP payments, accounting for approximately 10 percent of annual net farm income for Kentucky. This current round of payments will total approximately $240 million to Kentucky farmers, assuming all payments occur.
The latest MFP covers several Kentucky crops including alfalfa, barley, canola, corn, cotton, millet, oats, rapeseed, rice, rye, sorghum for grain, soybeans, sunflowers, triticale, and wheat. Only hogs and dairy are included for livestock enterprises.
For a complete list of eligible commodities/criteria and application/payment details go to www.farmers.gov/manage/mfp.
Unlike the initial round where MFP payments had a specific payment rate for each crop, this round will be based on a single county payment rate for acres of production in a specific county multiplied by a farm’s total plantings of MFP-eligible crops in aggregate within that county for 2019. Payment rates are based on USDA’s estimates of the impact of trade distortion had on individual counties. USDA is expected to provide details on the calculation methodology in the coming weeks.
A producer’s total payment acres for this round cannot exceed total 2018 plantings. Producers who filed prevented planting claims then planted an MFP-eligible cover crop prior to August 1, 2019, with the potential to be harvested, are eligible for a $15 per acre payment.
National crop payments ranged from $15 to $150 per acre of eligible crops planted in 2019, with Kentucky counties ranging from a low of $24 per acre in Elliot, Johnson, Magoffin and Whitley Counties to a high of
$93 per acre in McCreary County. Most west Kentucky grain counties were in the $55 to $80 per acre range. See table on the following page for individual Kentucky county payment rates.
According to USDA, payments for the latest round of MFP payments will be made in three different installments or what USDA refers to as tranches. The first payment, which will be made in mid-to-late August, will be the higher of either 50 percent of a producer’s calculated payment or $15 per acre. The second and third portions will be reevaluated based on the trade environment later in the year. If conditions warrant, the second portion will be made in November, and the third in early January.
On the livestock side, dairy producers (who were in business on June 1, 2019) will received $0.20/cwt based on production history, and hog producers will receive a payment of $11 per head based on the number of live hogs owned on a day selected by the producer between April 1 and May 15, 2019.
To be eligible for MFP payments, applicants must had either have an average adjusted gross income AGI) for tax years 2014, 2015, and 2016 of less than $900,000, or derive at least 75 percent of their adjusted gross income from farming. According to USDA, “MFP payments are limited to a combined $250,000 for non-specialty crops per person or legal entity. MFP payments are also limited to a combined $250,000 for dairy and hog producers and a combined $250,000 for specialty crop producers. However, no applicant can receive more than $500,000.”
Sign up began on July 29, 2019 and will continue until December 6, 2019. Check with your local Farm Service Agency (FSA) office for more details.