USDA details trade damage estimate calculations
On Sept. 4, the USDA began administering payments to farmers under the Market Facilitation Program (MFP), part of a potential $12 billion relief package for farmers affected by retaliatory tariffs in the United States’ trade disputes with Canada, China, the European Union, Mexico and Turkey.
While the federal government assistance is welcomed, growers of some commodities have been critical of the payment rates, suggesting that the payments won’t provide meaningful relief as they struggle with an extended period of low commodity prices and other economic stressors.
On Sept. 13, the USDA published details of how the trade disruption damage estimates were calculated.
The USDA’s Office of the Chief Economist published the USDA Trade Methodology report to explain how it developed an estimate of gross trade damage for commodities with assessed retaliatory tariffs. According to the report, the USDA used the same approach often used in adjudicating World Trade Organization trade dispute cases. The trade damage was determined by subtracting a commodity’s value with the tariff from its value without the tariff.
The trade damage estimates were also used to determine the value of commodities to be purchased under the Food Purchase and Distribution Program, another portion of the trade mitigation package.
The MFP payment rates are: corn ($0.01/bushel), cotton ($0.06/pound), dairy (milk, $0.12/cwt), pork ($8/head), sorghum ($0.86/bushel), soybeans ($1.65/bushel), and wheat ($0.14/bushel).
To read the complete report, visit https://gfb.ag/USDAtradecalcs.