The United States Department of Agriculture (USDA) today announced it first round of tariff relief, set at 12¢/cwt for a half of a dairy farmer’s highest annual production for the years 2011, 2012 or 2013. The “Market Facilitation Program” (MFP) payments will be capped at $125,000 per person or legal entity. Dairy operations are also required to have been in operation on June 1, 2018 to be eligible for payments.
Sign-up for the payments will begin September 4 at local USDA Farm Service Agency offices. Eligible participants must have an ownership interest in the commodity, be actively engaged in farming and have an average adjusted gross income for years 2014, 2015 and 2016 of less than $900,000.
A second round of MFP payments could be made later this year if trade disputes with Mexico, Canada and China are not resolved. President Trump announced a resolution of the trade dispute with Mexico today in the North American Free Trade Agreement (NAFTA) negotiations. But to fully resolve the NAFTA problem, Canada must be brought back into the talks. The trade dispute with China is on-going.
USDA estimates this first round of payments will amount to about $127.4 million in direct payments to dairy farmers. The agency also expects to spend $84.9 million in dairy food purchases for a total dairy expenditure of $212 million out of the $12 billion package. Soybean farmers will get the lion’s share of USDA payments--$1.64/bu for a total of $3.6 billion.
Reaction to the low rate of tariff relief was swift—and less than complimentary. “Today’s announcement by the USDA on its tariff mitigation plan falls far short of addressing the losses dairy producers are experiencing due to trade retaliation resulting from the Trump Administration’s imposition of steel and aluminum tariffs,” says Jim Mulhern, CEO and President of the National Milk Producers Federation.
“The dairy-specific financial assistance package provided by USDA – centered on an estimated $127 million in direct payments – represents less than 10 percent of American dairy farmers’ losses caused by the retaliatory tariffs imposed by both Mexico and China.”
Mulhern says dairy futures prices from May, when the tariffs were announced, through December have dropped more than $1.2 billion. “Milk prices for the balance of the year are now expected to be $1.10-per-hundredweight lower than were estimated just prior to the imposition of the tariffs on U.S. dairy exports,” he says.
“Dairy farmers are particularly vulnerable to downward price swings because, unlike crop farmers who harvest once a season, dairy producers harvest and market their product daily. If farmer incomes continue to suffer as projected, we will lose more farms,” he says.
“Although there may be a second direct aid package at the end of the year, dairy producers are greatly disappointed that the farmer aid portion of today’s trade relief package does not adequately address the harm done to dairy,” Mulhern says.
You can read Mulhern’s complete statement here.