Mapping the Market Facilitation Program

As of December 3, 2019, USDA reported $10.33 billion in Market Facilitation Program (MFP) payments for 2019 (USDA, farmers.gov), with payments being made in three tranches of 50% in August, 25% in late fall 2019, and 25% in early 2020. While the third tranche has not been paid there is no indication to suggest it will not be paid.  This article maps 2019 MFP payment rates ($/acre), and estimated payment averages ($/acre) by county for MFP in 2018, comparing the changes and shifts in support across both years.

Background

The Market Facilitation Program (MFP) was created by the Trump Administration’s USDA in response to the tariff conflict it initiated in 2018 and has continued to date (see e.g., farmdoc daily, July 30, 2019; November 21, 2019August 22, 2019).  Notably, the calculation for the county payment rates depends on the commodity rates established by USDA. The 2019 commodity rates are provided below in Table 1, along with the payment rates for the 2018 MFP program. The commodity rates changed, with increases of varying magnitudes, for those included in the 2018 and 2019 programs. USDA used the same broad methodology to estimate trade damages to determine commodity rates in both years, but updated their modeling work in 2019 to include a broader range of impacted commodities, account for additional and continued trade retaliation, and made adjustments to the baseline periods against which trade damages were measured (USDA, 2019).

In 2019 MFP payments were tied to planted acreage, with initial program information indicating farmers were required to plant from a list of eligible crops to receive a payment in 2019. USDA later clarified that planting certain cover crops would also allow for the farmer to receive the minimum ($15 per acre) payment.  Payments for the 2018 MFP program were made based on actual production of the six commodities with payment rates listed in Table 1.  The announcement of the 2018 program was made after the crop had been planted so, while coupled to production, did not impact planting decisions in 2018.

Discussion

Figure 1 maps estimates of average 2018 MFP payments per acre at the county level. These estimates are based on total 2018 MFP payments at the county level and planted acreage to the commodities with payment rates in 2018, both obtained from the Farm Service Agency (total crop MFP payments in the county divided total planted acreage to MFP commodities for 2018 provides the estimates mapped in Figure 1).

Comparing 2019 and 2018 MFP Payments

Large relative increases in payment levels also occurred in areas of the South.  These increases are likely due to the inclusion of additional crops as well as the larger 2019 commodity rates for crops grown in that region, such as cotton, in 2019.  Payments in the majority of the Midwest region tended to increase in the 40 to 80% range (ratio of 1.4 to 1.8), consistent with the increase in aggregate funding authority for MFP in 2019 and the larger commodity rates for corn and soybeans.

Concluding Thoughts

The Market Facilitation Program in 2019 differed from the 2018 version. Payments were made based on fixed county payment rates on acreage planted to eligible crops, compared with payments tied directly to production of a smaller set of commodities in 2018. In general, producers will receive larger MFP payments in 2019 on a per acre basis, assuming the third and final tranche of payments is made in early 2020.  This was due to increases in total funding authority, higher commodity rates upon which payments were based, and an expansion of the program to a larger set of commodities and eligible planted acreage.

While nearly all areas of the U.S. should realize increased MFP support in 2019, the relative increases vary by region.  MFP support saw the largest relative increases in areas of the West, South, and Northeast.  Smaller relative increases will occur throughout most of the Midwest. Future articles will take a closer look at the change in MFP support levels from 2018 and 2019 across commodities and regions of the U.S.