GAO Breaks Down MFP Payments
Democratic Senators Point to Payment Disparities for Southerners, Cotton Growers
OMAHA (DTN) -- The Government Accountability Office on Monday released a report showing farmers in Southern states, especially those who grow cotton, received higher Market Facilitation Program (MFP) payments than farmers of other commodities and specialty crops around the country.
A pair of Midwest Democratic members of the Senate Agriculture Committee pointed to the report Monday to argue farmers who grow specialty crops, small farmers and Midwestern farmers, in general, did not get their fair share of MFP payments, which were meant to offset trade losses during President Donald Trump's tariff battles over the past three-plus years.
The report comes after MFP has basically shut down as USDA has moved on to the Coronavirus Food Assistance Program (CFAP) and is preparing to announce rules for CFAP-2. The White House Office of Management and Budget is now reviewing USDA's second round of CFAP aid.
The GAO report largely breaks down how USDA distributed $14.4 billion in MFP payments in 2019 to 643,965 farm operations and 870,427 individual farmers. GAO calculated average payment per operation, per individual farmer and on a per-acre basis by state.
In average MFP payments per operation, Arizona had that highest average at $83,406, but Arizona only had payments for 596 operations and 1,586 total individual farmers. Rhode Island had the lowest average payment per operation to just 72 farmers at $2,961 dollars. Nationally, the average farm operation received $22,313.
For average MFP payments per individual, Georgia led the nation at $42,545 on average to 7,306 farmers. That is more than double the national average of $16,507 per individual for the 870,247 farmers who received payments. Illinois led the nation in the number of individuals receiving payments with 98,380 individuals receiving 2019 MFP payments, collecting an average of $14,765.
On a per-acre basis, the GAO stated, Georgia farmers averaged $119 per acre. The top 10 states for payments per acre were weighted heavily toward Southern states. In order, they were: Georgia, Mississippi, Alabama, Arizona, Arkansas, Tennessee, Louisiana, Texas and Illinois. Nationally, the average payment was $57 an acre. Farmers in 15 states received an average payment from $23 to $15 an acre.
Sen. Debbie Stabenow, D-Mich., criticized how USDA came up with the payment rates and which crops were included in MFP. Stabenow's complaints against USDA's handling of MFP have continued. She said the GAO report confirms her criticisms of USDA's handling of MFP.
"The Market Facilitation Program has favored certain farms over others," she said.
Specialty crops -- considered most fruits, vegetables and nuts -- received $293.9 million of the MFP total, or roughly 2% of all MFP payments. Specialty crop farmers in Stabenow's home state of Michigan received $907,785 total even though the state leads the country in production of fruit crops such as tart cherries, which were not included in the MFP.
"Specialty crop producers like tart cherry growers weren't even eligible for direct assistance despite the hits they have been taking and the losses they have been taking," Stabenow said. "So, it's just not fair."
"That's not a surprise because there are more individual farms in the Midwest," Stabenow said. "But whether or not farmers break even or go into debt is not based on how much their states receive as a whole."
Sen. Sherrod Brown, D-Ohio, criticized that cotton producers received a higher payment for the market price -- 40% according to the GAO -- compared to soybean farmers who received 25%, "even though every third row of soybeans typically goes to the Chinese market," Brown said.
Don Gregory, a farmer from Traverse City, Michigan, spoke on Stabenow's call Monday, saying unfair trade practices have had a negative impact on the tart cherry industry. That has come in part because of Turkish imports into the U.S. that pay no duty. But tart cherries had seen increased export to China, Gregory said.
"The rug was pulled out from underneath us," Gregory said. He added that neither tart cherries nor apples were included in MFP. "We seem to be the pimple on the elephant's tail when it comes to government assistance under these programs that could have helped assist our growers during these real trying times."
A USDA spokesperson pushed back on the Democratic senators' criticism of MFP, stating that President Trump was the first president to stand up to China's unfair trade practices.
"USDA acted quickly to assist America's farmers and ranchers -- of all sizes and for all market outlets -- to ensure they continue to produce enough food, fuel, and fiber to feed ourselves and the world," the spokesperson said.
Stabenow pointed out there is no communication between USDA and Democrats on how USDA plans to implement any new round of CFAP aid.
USDA's response also stated MFP "was not designed to be a general farm bill program. It was also designed to make sure farmers who are most impacted receive the most aid. For example, cotton and sorghum received higher MFP payments because they had significantly higher trade damages per unit of production compared to other MFP commodities."
USDA's MFP2 was announced May 23, 2019, after talks between the U.S. and China broke off and President Trump called for more direct aid to farmers.
U.S. cotton exports in the first two years of the Trump administration grew in value. Exports during 2017, at $5.84 billion, were 32% higher in value than 2016. The 2018 exports, at $6.56 billion, also were 10% higher than 2017 sales. Cotton sales in 2019 dropped to $6.15 billion, a 6.3% decline in value.
Cotton sales specifically to China in 2018 were $925.7 million, 40% higher than 2016 sales to China. Cotton sales in China dropped to $711.5 million in 2019, a 23% decline in value. Cotton sales to China for 2020 have rebounded dramatically and were 63% higher for the first half of 2020 than a year ago.
Grain sorghum sales to China fell dramatically over the past five years. Sorghum reached $2.1 billion in sales in 2015, but that was cut in half in 2016. Sales declined to $838.1 million in 2017, then dropped to $520.7 million in 2018. Last year, U.S. sorghum sales to China had fallen to $191 million, just 19% of what they had been in 2016. This year, sorghum sales for the first half of the year have rebounded, hitting $537.8 million in the first six months of 2020.
Georgia is also home to Agriculture Secretary Sonny Perdue, the state's former governor. Stabenow was asked if there was a potential conflict of interest given that farmers got paid more in Georgia than elsewhere.
"I was surprised. Just from my own standpoint, if I was the secretary, I'd feel very uncomfortable having that as the case because of that fact that question could be raised," Stabenow said.
USDA, in its response, did not specifically address questions about Georgia payments, but noted, "While the Democrats have been launching false attacks about USDA's MFP program for months, they have yet to offer concrete ideas on how to make the program stronger."
USDA stated MFP payments are based on trade damage, not on regions and farm size. USDA noted the Midwest has received more than 68% of funds in the program with the top five states for payments being Iowa, Illinois, Minnesota, Texas and Kansas. USDA stated farmers with fewer than 100 acres received an average of $59.68 an acre compared to farmers with more than 2,500 acres receiving an average of $68.64 an acre.
The GAO also broke down the largest operations receiving payments, which ranged from $1.27 million to $2 million in payments and typically included payments to both operators and spouses.
Stabenow added she is concerned USDA is using too much funding from the Commodity Credit Corp. for ad-hoc aid programs when CCC also funds general farm bill commodity and conservation programs. At the moment, USDA "has a blank check," she said, and is not distributing funds fairly.
"They're funded out of this same pot of money, and I'm not sure how they are proceeding at this point," Stabenow said. "That's the concern. We should be sitting down in a bipartisan way like we do in the farm bill."
GAO report on USDA Market Facilitation Program: https://www.gao.gov/…
Chris Clayton can be reached at Chris.Clayton@dtn.com
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