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USDA Issues Third, and Final, Trade Payment to Farmers

USDA Issues Third, and Final, Trade Payment to Farmers
Stateline Feb4
A farmer plants soybeans in a field in Springfield, Nebraska, last May. President Donald Trump announced a third round of payments for farmers who have struggled under the financial strain of his trade dispute with China.
Nati Harnik/The Associated Press

The U.S. Department of Agriculture announced this week that it will make the third — and final — payment to farmers who have lost billions of dollars in exports because of trade disputes.

The release of $3.6 billion in trade war payments brings the total for tariff payments to farmers on 2019 production to $14.5 billion.

Similar to the second round of payments for the Market Facilitation Program (MFP) in 2019, the third tranche will be made on a per-acre basis. Payment rates per acre range from $15 to $150. In addition, the USDA will consider the farm’s total planting of eligible crops in 2019. For example, the county payment rate will be multiplied by a farm’s total planting of eligible crops like corn and soybeans. That figure will determine the payout, according to the USDA. Payouts differ for dairy and specialty crop farmers.

The payments are intended to support farmers for crops that were subject to retaliatory tariffs from China.

The per-acre payment rates have received criticism from Democratic lawmakers, conservative think tanks and farmers who argue that they mostly serve to shore up political support from rural voters, an important Trump constituency. Per-acre rates vary widely within states and among different regions of the country.

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Critics also have argued that the MFP payments fail to help the regions and crops harmed the most after a year of extreme weather events.

The trade war eased last month, when President Donald Trump and China signed a "phase one" trade deal that eases some tariffs on Chinese goods. In return, China has promised to increase purchases of U.S. goods and services.

In addition, Trump last month signed the U.S.-Mexico-Canada Agreement, or USMCA. Changes to what was previously the North American Free Trade Agreement include widening farmer access to Canadian markets.

Farmers are optimistic about future conditions in agriculture, according to the Ag Economy Barometer, a nationwide measure of the health of the U.S. agricultural economy by Purdue University/CME Group.

Tuesday’s report showed farmer optimism rose significantly in January over December. The sharp improvement in future expectations coincided with Trump’s signing of the China deal, according to the report. The nationwide survey is based on responses from 400 agricultural producers, taken Jan. 13-17.

Although every state has received Market Facilitation Program payments, some states have benefited more than others, according to research from the State Fiscal Health Project at The Pew Charitable Trusts (Pew also funds Stateline).

Iowa, whose farmers received more program dollars than farmers elsewhere, registered the fastest inflation-adjusted personal income growth over the past year. North Dakota, South Dakota and Texas also recorded strong year-over-year total personal income gains, according to the research.

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