Analysts at the American Farm Bureau Federation made quick work of crunching the numbers on direct payments to farmers in USDA’s tariff-mitigation strategy announced on Monday.
In their latest Market Intel report released on Tuesday, the analysts broke down assistance payments by commodity at the state level.
While the $6.1 billion aid package includes funding for government food purchases and trade promotion, $4.7 billion is expected to be distributed to corn, cotton, dairy, hog, soybean, sorghum and wheat farmers through the Market Facilitation Program (MFP).
The analysts pointed out, however, that payments should be viewed as an upper limit because eligibility wasn’t factored in.
“Given the impact retaliatory tariffs have had on soybean and pork prices, it should come as no surprise that the top three MFP states are top-producing soybean and hog states,” the analysts said.
They estimate Illinois will take the top share of direct payments at $596.67 million, and that Illinois, Iowa, Minnesota, Indiana and Nebraska are estimated to receive more than $2.1 billion — 45 percent.
The top 10 states, which include some of the largest wheat and grain sorghum states, are expected to account for 71 percent of the payments.
Broken down by commodity, Illinois will lead the way in soybean payments at $549.61 million and Iowa will top the charts on hog payments at $89.72 million.
Texas will be the top recipients of cotton payments at 93.89 million, and Kansas will take top sorghum payments at $96.30 million.
California will claim the highest dairy payments at $23.83 million, and North Dakota will lead the way in wheat payments at $22.40 million.
“Each commodity on the list has faced tariffs of various severity in different and sometimes multiple markets, which has resulted in a wide range of trade and price disruptions,” the analysts said.
“USDA’s job of isolating the impact on these commodities during a summer of volatile prices was far from enviable,” they said.
Payments are based on payment rates per unit of production covering 50 percent of a farmer’s total actual production.
With USDA authorized to spend $12 billion to mitigate the retaliatory tariffs, it is expected that this is the first round of direct payments. USDA said it would make further payments if warranted. Those could cover the other half of production.
Payments are capped at $125,000 per person or legal entity for combined livestock production and combined crop production, but the cap is separate for livestock and crops. A livestock producer who also has a crop operation could potentially receive as much as $250,000 in direct payments.
Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming and have an average adjusted gross income of less than $900,000 for tax years 2014, 2015 and 2016.
They must also comply with the provisions of the Highly Erodible Land and Wetland Conservation regulations.
To view AFBF’s full report, visit www.fb.org .