November 2018
Ag Insight

Ag Insight

USDA Considering Relocation Proposals for ERS, NIFA

The U.S. Department of Agriculture is considering proposals from locations around the nation interested in becoming the new home for the agency’s Economic Research Service (ERS) and the National Institute of Food and Agriculture (NIFA). 

An initial mid-September deadline was extended to mid-October to give interested parties more time to submit proposals after USDA Secretary Sonny Perdue announced plans in August to move the ERS and NIFA headquarters outside the Washington area by the end of 2019.

It is possible that ERS and NIFA will be co-located when their new homes are found and a contingent of the agencies will remain in the Washington area, USDA has said.  As part of the change, ERS will again be aligned with the Office of the Chief Economist under the Office of the Secretary.

 USDA has cited three main reasons for the relocations:

  • Under the plan, no ERS or NIFA employees will be involuntarily separated. Every employee who wants to continue working will have an opportunity to do so, although for most that will mean moving to a new location. Employees will be offered relocation assistance.

  • For those who are interested, USDA is seeking approval from the Office of Personnel Management and the Office of Management and Budget for both voluntary early retirement authority and voluntary separation incentive payments.

  • Perdue also noted that 91 percent of USDA’s approximately 108,000 employees already work outside of the Washington, D.C. region. 

     

   

Drop Expectedin 2018 Net Farm Income

Net farm income, a broad measure of profits, is forecast to decrease $9.8 billion, or 13 percent, from 2017 to $65.7 billion in 2018, after increasing $13.9 billion (22.5 percent) in 2017.

Net cash farm income is forecast to decrease $12.4 billion (12 percent) to $91.5 billion.

In inflation-adjusted 2018 dollars, net farm income is forecast to decline $11.4 billion (14.8 percent) from 2017 after increasing $13.0 billion (20.3 percent) in 2017. If realized, inflation-adjusted net farm income would be just slightly above its level in 2016, which was its lowest level since 2002.

Inflation-adjusted net cash farm income is forecast to decline $14.6 billion (13.8 percent) from 2017 to $91.5 billion, which would be the lowest real-dollar level since 2009.

Net cash farm income encompasses cash receipts from farming as well as farm-related income, including government payments, minus cash expenses. Net farm income is a more comprehensive measure that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings.

The 2018 forecasts for U.S. farm sector income and finances – including government payments, net farm income and net cash farm income – do not include payments under the Market Facilitation Program (MFP), announced in July, to mitigate the impact of the nation’s trade disputes. (See following report.)

When the income forecast was released, it was too early to tell how many producers would complete the MFP enrollment process and receive a payment in 2018 versus 2019, or how the eligibility criteria would impact the total level of payments issued, which would change calendar-year 2018 farm income totals.

 

Details Announced on Farm Aid Package

The sign-up period for the federal program aimed at assisting farmers affected by retaliation by foreign nations in ongoing trade disputes will run through Jan. 15, 2019, with information and instructions provided at www.farmers.gov/mfp.

USDA officially launched a package of programs in September, authorizing up to $12 billion for the effort. Officials said the steps will be consistent with World Trade Organization obligations. 

As part of the program, producers of certain commodities can sign up for the Market Facilitation Program (MFP), designed to help them meet some of the costs of disrupted markets.

USDA also said it will buy identified commodities under a food purchase and distribution program.  Additionally, USDA has begun accepting proposals for the Agricultural Trade Promotion Program (ATP), designed to help American farmers find and access new markets for their products. 

The overall package is considered a short-term relief strategy to protect producers while trade agreements are negotiated, deals that the Trump Administration insists be "free, fair and reciprocal."

"These programs will allow President Trump time to strike long-term trade deals to benefit our entire economy, including the agricultural sector, in the long run," Agriculture Secretary Sonny Perdue said. 

"Farmers will tell you that they would always prefer to sell a good crop at a fair price, rather than receive government aid, and that’s what long-term trade deals will accomplish.  But in the meantime, President Trump has promised that he will not allow American agriculture to bear the brunt of the unjustified retaliation from foreign nations," Perdue stated. 

USDA’s Farm Service Agency (FSA) will administer the MFP to provide payments to corn, cotton, dairy, hog, sorghum, soybean and wheat producers.

Eligible producers should apply after harvest is complete, as payments will only be issued once production is reported. A payment will be issued on 50 percent of the producer’s total production, multiplied by the MFP rate for a specific commodity. 

A second payment, if warranted, will be determined by the USDA and announced in coming months.

MFP payments are limited to a combined $125,000 for corn, cotton, sorghum, soybeans, and wheat capped per person or legal entity.  MFP payments are also limited to a combined $125,000 for dairy and hog producers.

Applicants must have an average adjusted gross income for tax years 2014, 2015, and 2016 of less than $900,000 and must comply with the provisions of the Highly Erodible Land and Wetland Conservation regulations.

USDA’s Agricultural Marketing Service (AMS) will administer a food purchase and distribution program to buy up to $1.2 billion in commodities targeted by other nations’ retaliatory actions. USDA’s Food and Nutrition Service (FNS) will distribute these commodities through nutrition assistance programs, such as The Emergency Food Assistance Program and child nutrition programs. 

Through the Foreign Agricultural Service’s (FAS) Agricultural Trade Promotion Program (ATP), $200 million will be made available to develop foreign markets for U.S. agricultural products.

USDA says it also is working on how to address market disruptions for producers of almonds and sweet cherries. 

 

Implementing the Produce Rule in Alabama

The cost of complying with the produce rule of the Food Safety Modernization Act (FSMA) will add up to a higher percentage of farm sales in Alabama than in most other states, according to a study by USDA’s Economic Research Service.

In an effort to improve food safety by reducing foodborne illnesses, the FSMA empowered the U.S. Food and Drug Administration (FDA) to impose new regulatory requirements on food producers and handlers, to expand requirements for and inspections of food imports, and to issue mandatory recalls of food.

As a result, FDA gained expanded authority to regulate fresh-produce production practices at the farm level. The FSMA produce rule is being implemented in phases beginning this year and will affect farms supplying almost all fresh produce sold in the United States.

The ERS study says Alabama’s projected high cost – 3.67 percent of sales – is because most produce is grown on relatively small farms. Only South Dakota at 3.73 percent and Alaska at 3.82 percent have higher costs as a percentage of sales.

Conversely, states where fresh-produce production is dominated by large farms have relatively low costs of compliance as a share of sales. Examples include Arizona (0.61 percent), Florida (1.31 percent), California (1.32 percent), and Washington (1.38 percent).