Inside D.C.

Dems demand USDA fix MFP — again

Critics ask – quite reasonably – that if, as President Trump asserts, his attempt at rebalancing every trade deficit the U.S. has while slapping punitive tariffs on trading partners is good for the economy, then why are we paying out $28 billion in Market Facilitation Program (MFP) payments?

Going back to 2018, the White House ordered USDA to invent a mechanism to “make farmers whole” as they saw various markets disappearing while the White House was imposing tariff after tariff.  MFP was the result of USDA’s efforts, and its direct payments are “aimed at assisting farmers suffering from damage due to unjustified trade retaliation by foreign nations.”  That statement makes sense if, I guess, the U.S. had not first tariffed the heck out of  exports from everyone from Mexico and Canada to the European Union (EU) to most/worst of all, China.

Analysts are quick to point out that for a lot of producers, the only thing keeping them on the farm is a combination of MFP and disaster payments.  So much for those Farm Bill programs, I guess.    

That reality is likely why USDA’s latest announcement induced a huge sigh of relief from rural parts.  Late last week the department announced it’s getting ready to mail out the second tranche of 2019 MFP direct payment checks, likely the week before Thanksgiving.  That mailing was in doubt given it appeared a couple of weeks ago the U.S. and China were close to tariff détente.  Right now, not so much so MFP is still in play.

So far, MFP has shelled out $6.7 billion on this year’s production and $8.6 billion was paid in 2018.  Total authorization for MFP, including public/private export market development and surplus commodity purchases, is $28 billion for 2018-2019, most coming through Commodity Credit Corp. (CCC) emergency borrowing authority. . 

And right about the time USDA was trumpeting the MFP payouts, 15 Senate Democrats, including Sen. Debbie Stabenow (D, MI), ranking member of the Agriculture Committee, released a report outlining their collective contention MFP unfairly favors some farmers – mainly southerners and their traditional crops – over others.  In a separate action, the same lawmakers sent a letter to Agriculture Secretary Sonny Perdue asking him to fix the MFP.  The problem is Perdue and the USDA number crunchers “fixed” the program once already, right after the first payments were cut. 

Going back to 2018 when the MFP was set up, producers of various crops taking an economic hit due to administration tariff battles argued loudly during the public comment period that USDA’s formula for allocating assistance made little sense.  USDA apparently agreed and reworked the original formula, shifting from a commodity-based payout scheme to a county-based approach.  Some producers contended then as the Democrats do now, the program favored some commodities and regions over others regardless of tariff war impact.

The Democrat lawmakers said USDA’s reinvention of the 2018 program formula created “a short-term solution that picks winners and losers between regions and crops, and while the impacts of the retaliatory tariffs are widespread, the payment rates have not aligned to help the regions and crops harmed the most.”

Stabenow released the Democrat report standing shoulder to shoulder with Minority Leader Charles Schumer (D, NY), saying USDA’s “flawed formula” disproportionately shifted MFP direct payments during 2019 to southern producers.  They contend the current formula creates “significant gaps and flaws that create inequity, fail to account for the actual damage to producers and even leave some producers shut out.”

A USDA spokesperson told reporters who asked the Senate Democrats are wrong.  The department asserts the Midwest has received more than 60% of the trade pain mitigation money, with Illinois, Iowa, Kansas, Nebraska and Minnesota being the top five states getting MFP checks.  

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