Farmers recently could file paperwork to claim a portion of the first round of federal funds meant to plug the hole in the markets caused by retaliatory tariffs, but heavy uncertainty surrounding the agriculture industry remains as the harvest season begins to rev up in earnest.
As of Sept. 4, farmers can now apply to the U.S. Department of Agriculture’s market facilitation program, which sets the initial payment rates for agricultural commodities. In total, the first payouts will use $4.7 billion to curb damage caused by falling commodity prices.
“Beginning September 4, farmers could begin applying for a partial payment of federal funds called Market Facilitation Program (MFP),” Ken Ford, agricultural and natural resources educator with the OSU Extension in Fayette County. “These are funds the federal government is using to help farmers due to the new tariffs that have been imposed on US commodities. Currently, once the farmer is complete with his harvest, he can apply at the local Farm Service Agency (FSA) for 50 percent of their payout, based on the amount of production for a particular crop or commodity. There is more than soybeans included in the MFP list. The commodities that can be used are, cotton, corn, dairy, hogs, sorghum, soybeans and wheat.”
Ford said due to the recent decrease in the commodity market prices, it will be necessary for farmers to receive the payment in order to cover all of the production costs for that commodity. Farmers that report their annual acreage of crops to the FSA office are eligible to receive this payment. This payment will still require farmers to try and reduce production costs such as fertilizer, chemicals and seed to be able to produce a profitable crop.
For more information farmers can stop by their local FSA office or visit www.farmers.gov/MFP.
Farmers can inquire about the payments currently, but they cannot apply for the payment until they are finished harvesting the particular commodity. According to Katie Maust at the Fayette County Farm Service Agency, there have been farmers stop by the FSA office to apply.
Soybeans have taken the brunt of the hit as the export market shrank since the U.S. trade war with China began in April. For that reason, soybeans have also received the highest percentage of trade mitigation funds, set at $3.6 billion, or $1.65 a bushel for half of the total soybean crop.
Hardin County Ag and Natural Resources Educator Mark Badertscher said the combination of the federal payouts and good yield year should help soybean farms.
“The bean price is a couple dollars lower than it was last year. So even though we can balance that out with higher yields, we’re still dealing with the impacts of the markets. Hopefully, it will help us work it out,” Badertscher said.
But while soybeans may see a bump, the corn crop may have a harder time. Trade mitigation funds have set aside $96 million, or a penny per bushel, for the corn crop — a price that’s little more than a pat on the head, said John Torres, director of government and industry affairs with the Ohio Corn and Wheat Growers Association.
The USDA released its methodology for the $0.01 per bushel corn price just this Friday, which set the estimated trade damage at $192 million. Torres said that formula fails to consider both ethanol and feed exports that make up the corn industry.
“Corn is going to be a crop that looks like it’s going to be hard to make money this year,” Badertscher said.
Fayette County Commissioner and local farmer Tony Anderson explained that the tariffs “have disrupted the normal flow of grain from U.S. export terminals to our valuable foreign customers,” adding, “every time there is a disruption in the market, the market goes down.” Anderson said he will be making some changes to his crop plans due to the effects of these tariffs, but is not yet sure what these changes will be. “I just know that I have to change to deal with the cards that I am dealt for my little operation here in Fayette County,” he said.
Local land owner Jim Garland said “the price of beans has dropped dramatically… and a lot of it is to do with tariffs.” He is hopeful, however that the tariffs “will help things in the long run.”
“A penny per bushel is a big slap in the face for corn growers,” Torres said. “While we appreciate the administration recognizes there’s a problem in trade, there’s simply not enough money in the U.S. Treasury to make U.S. farmers whole.”
While Van Wert County farmer Nick Williams said he plans to sign up for a portion of the trade mitigation funds, he’s not relying on the payout to survive.
“It’s definitely going to be a bonus, and I’m going to take advantage of it. But it’s not a make or break deal,” Williams said. “I’ve been through this before, and hopefully, I’ll make it through again.”
Williams said he supports President Donald Trump’s initiatives in trying to “level the playing field,” even if it means farmers having to take some economic damage to make it happen, and that prior to 2014, market prices had created some strong returns for local farmers.
“We had some phenomenal good years,” Williams said. “Now we’re back to reality. We’re going to have to make it work for us. We’ll have to cut some costs and make it work.”
Torres said 2018, however, may just be the tip of the iceberg of a lot of long-term damage if the federal trade war with China continues. As long as the tariffs remain in place, Chinese buyers will look to outside markets, break off current trade relationships with American markets and look to other countries to make up any shortfalls.
“I’m worried about 2019,” Torres said. “Farmers are making the decisions about what they’re going to do next year — what kind of feed they’re buying, what fertilizer, their marketing plan. It makes the 2019 market year uncertain if these trade disputes don’t get settled.”