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Caught in Trade War, US Cotton Growers Get Fresh Federal Funding

The National Cotton Council (NCC) said the U.S. Department of Agriculture’s (USDA) release of the second tranche of Market Facilitation Program (MFP) payments for the 2019 crop year came at just the right time.

NCC chairman Mike Tate, an Alabama cotton producer, said this assistance is needed as U.S. cotton’s economic health has deteriorated significantly during 2019. He noted that lost market share to China and a slowdown in global cotton demand have contributed to cotton futures prices falling by approximately 30 cents per pound since summer 2018. With average yields, that drop equates to about $250 less revenue per acre.

“This second tranche of 2019 MFP payments, along with already provided disaster assistance, will give farmers, who have had a tough year due to unfair trade retaliation and natural disasters, much-needed funds in time for Thanksgiving,” Secretary of Agriculture Sonny Perdue said.

Tate said the U.S. cotton industry is urging USDA to proceed with facilitating the third MFP tranche, which the agency has indicated will be 25 percent of the 2019 MFP. USDA indicated a January timetable for that tranche, but its initiation could be affected by a potential trade agreement with China.

President Trump authorized USDA to provide up to $16 billion in programs, which is in line with the estimated impacts of unjustified retaliatory tariffs on U.S. agricultural goods and other trade disruptions. In May, Secretary Perdue announced several actions to assist farmers in response to trade damage from unjustified retaliation and trade disruption.

They included MFP for 2019, authorized under the Commodity Credit Corporation (CCC) Charter Act and administered by the Farm Service Agency (FSA), to provide $14.5 billion in direct payments to producers. The CCC also used its Charter Act authority for $100 million to be issued through the Agricultural Trade Promotion Program (ATP) administered by the Foreign Agriculture Service (FAS) to assist in developing new export markets on behalf of producers.

For the Second Tranche of 2019 MFP payments, farmers can sign up at local FSA offices through Dec. 6. MFP assistance is based on a single county payment rate multiplied by a farm’s total plantings of MFP-eligible crops in aggregate in 2019. A producer’s total payment-eligible plantings cannot exceed total 2018 plantings. County payment rates range from $15 to $150 per acre, depending on the impact of unjustified trade retaliation in that county.