Farmers will be eligible for up to $125,000 in direct payments from the U.S. Department of Agriculture to recuperate a portion of trade losses.
U.S. Agriculture Secretary Sonny Perdue and other senior USDA officials announced the details of aid authorized by President Donald Trump earlier this year to help producers weather the estimated $12 billion in losses from trade battles entered by his administration.
Perdue acknowledged that the stalled efforts to re-negotiate foreign trade deals “could not have come at a worse time” for farmers, stating that farm income in the U.S. has declined 50 percent in the past five years, compared to income from record high prices for many crops experienced in 2013.
Rob Johannson, the USDA's chief economist, echoed those sentiments, adding farm income for 2018 is again forecast to decline. Meanwhile, borrowing is up 21 percent since 2012, debt levels have reached those of the '80s and interest rates are on the rise.
“We know this is coming on top of a very tight farm economy,” he said.
The direct payments will be administered by the Farm Service Agency, according to Undersecretary for Farm Production and Conservation Bill Northey, based on total production and rates set by USDA on about half a dozen products, including corn, wheat, soybeans, dairy and pork.
For field crops, payments will be made at a set rate on 50 percent of a farm’s total production. The rate for wheat is 14 cents per bushel, soybeans is $1.65 per bushel and corn is 1 cent per bushel.
Pork producers will be paid at a rate of $8 per pig for all pigs on hand as of Aug. 1 and dairy producers will be paid based on margin protection production history at a rate of 12 cents per hundredweight. They will also only receive payments on half their production.
“While we continue pressing the administration to get better trade deals in place as soon as possible, we appreciate USDA’s work to get this assistance to farmers in a timely manner,” Sen. John Hoeven, R-N.D., said in a statement. “USDA today rolled out this first half of trade assistance, and there are clearly areas that will help our producers, including providing $1.65 per bushel for soybeans … For the remaining half of the program, USDA needs to take a closer look at the corn model to determine a more realistic impact to producers.”
Based on Aug. 1 conditions, North Dakota's 2018 spring wheat crop is forecast at 312 million bushels, according to the USDA's National Agricultural Statistics Service. Winter wheat production is forecast at another 2.8 million bushels.
Corn production is forecast at 459 million bushels, up 2 percent from 2017. Average yield is forecast at 148 bushels per acre. Soybean production is forecast at 249 million bushels, up 4 percent from last year. Average yield per acre is forecast at 38 bushels per acre.
That's about $31 per acre of soybeans, said North Dakota Soybean Growers Association Executive Director Nancy Johnson.
"If a farmer has 1,000 acres of soybeans, which there are lots of people who do, that comes to $31,000," she said.
And if they also have another 1,000 acres of wheat it can add up fairly quickly.
Johnson said the average farm size in the Red River Valley is about 1,200 acres. In the west, it's larger.
"It's going to give them the opportunity to have a little bit of cash flow but certainly it's not going to make anybody whole," she said.
If all of that production were eligible for payments, North Dakota farmers could receive a total of $21.8 million for spring wheat, $2.3 million for corn, and $205.4 million for soybeans.
Northey said $4.7 billion is expected to be the cost for this first round of payments. Of that, $3.6 billion is expected to go to soybean production, $290 million to pork, $127 million to dairy, $96 million to corn and $156 million to wheat. Cotton and sorghum are the other eligible crops.
The $125,000 payment limit will be separate from payment limits for crop insurance, according to Northey.
FSA will take applications starting Sept. 4 through mid-January. There may be a second round of payments made later this year should tariffs continue. For crops, such as wheat, pork and dairy, Northey said payments could be made to farmers as early as mid-September.
Beef, dairy, pork and some specialty crop producers also could benefit from another portion of the aid package. USDA will be making $1.2 billion in commodity purchases, which are then used by states to feed those in need.
Undersecretary for Marketing and Regulatory Programs Greg Ibach said USDA plans to spend $558.8 million on pork, $14.8 million on beef and $84.9 million on dairy. Hoeven said potato, edible beans and pulse crops also stand to benefit, though those purchases are expected to be much smaller — $1.8 million for lentils, $11.8 million for peas, $18 million for navy beans, $44.5 million for potatoes.
The purchases will be spread over several months and Ibach said it will not displace purchasing for other programs, such as the school lunch program.
"Everything helps," North Dakota Pork Council Executive Director Tamra Heins said, but keeping markets open is the ultimate goal.
Heins said the hardest part for pork producers is that many were in the midst of an expansion to provide more pork to places like China.
"Now those are taken away and we're kind of getting a double whammy when you shut down the markets we were expanding for," she said.