MFP Trade-War Payments Covered About 85% of USDA's Own Estimated Farm Export Losses — But Missed Badly by Crop

Summary

USDA's own Economic Research Service put direct U.S. agricultural export losses from other countries' retaliatory tariffs at more than $27 billion for 2018 through the end of 2019 (about $25.7B of it from China). Over the same two years, USDA's Farm Service Agency paid out about $23.1 billion in Market Facilitation Program (MFP) trade-aid payments ($8.6B in 2018 and $14.5B in 2019). On that basis, government payments covered roughly 85% of the estimated losses in aggregate, leaving a national shortfall of about $3.9 billion.

But the aggregate number hides the real story: GAO's review of the program's own design shows the money was allocated nothing like the losses were distributed. Corn producers received about $3 billion more in 2019 than corn's own estimated trade damage, while soybean, sorghum, and cotton producers — who bore the great majority of the actual damage (soybeans alone were ~71% of estimated annualized losses) — received less than their estimated damage. So for many soybean farmers specifically, the trade aid fell short of their share of the loss, even though the program as a whole came close to matching the national total.

The loss estimate

USDA ERS report ERR-304 ("The Economic Impacts of Retaliatory Tariffs on U.S. Agriculture," Jan 2022) is the most authoritative primary-source figure: direct agricultural export losses to retaliating trading partners totaled $27 billion+ cumulatively across 2018-2019. China accounted for ~95% of that ($25.7B); the EU and Mexico made up most of the rest. The same report also gives an annualized loss rate of $13.2 billion/year (mid-2018 to end of 2019) for selected commodities, of which soybeans alone were $9.4B/year (71%), followed by sorghum ($854M/yr) and pork ($646M/yr).

This $27B figure is a measure of direct export-value loss from the tariffs specifically — it is not a comprehensive accounting of every dollar of farm income lost in the trade war (it excludes any gains from sales to non-retaliating markets, excludes broader commodity-price depression, and stops at end-2019). Independent academic estimates (Carter and Steinbach 2020; Grant et al. 2021) put export-sales losses in a similar range to USDA's own figure, which is why ERS's number, rather than a single outside estimate, is used here as the loss benchmark.

The payments

USDA's response was the Market Facilitation Program: $8.6 billion paid in 2018 and $14.5 billion in 2019, for a combined $23.0-23.1 billion (USDA allocated up to $25.1B; GAO-22-468 reports ~$23.0B actually outlaid). Measured against ERS's $27B loss estimate, that is a national coverage ratio of about 85%.

For context, this corpus's own USDA farm income series (ag.ers_farm_income) shows TOTAL government payments to farms across every program (not just MFP: this also includes crop-insurance-related outlays, conservation, ARC/PLC, and other support) at $11.5B in 2017, $13.7B in 2018, and $22.4B in 2019, rising further to $45.6B in 2020. That 2020 figure includes the separate, much larger COVID-era CFAP support program and should not be read as trade-war compensation.

Why the aggregate number is misleading

GAO's 2022 review (GAO-22-468) is the key finding here: USDA's 2019 payment formula set a flat per-acre payment rate across all covered crops within a county, decoupled from each crop's own estimated trade damage. According to GAO, this structure meant 2019 corn payments totaled roughly $3 billion above corn's own estimated trade damage, while soybean, sorghum, and cotton payments came in below their estimated damages — even though those crops, especially soybeans, accounted for the large majority of the actual losses. GAO also reported the formula produced higher average per-acre payments for Southern producers of a given crop than for Midwest, Northeast, or Western producers of that same crop. Separately, an academic review of program outcomes (Giri, Peterson, Sharma & Tetteh 2020, Choices Magazine) reported that for many recipients, 2018 payments were larger than the price-decline impact of the retaliatory tariffs on their crop.

Net picture: in aggregate, MFP came reasonably close to USDA's own loss estimate (about 85% covered, roughly $4B short nationally). But because the money was not allocated in proportion to where the actual losses fell, some producers — notably many soybean growers, the crop that bore the bulk of the damage — ended up under-covered, while others, notably corn growers, ended up over-covered.

Every query behind this report

2 warehouse calls ran in this session, in order. Each is reproducible against the same snapshot.

SELECT "year", amount FROM ag.ers_farm_income WHERE state='US' AND category ILIKE '%government payment%' AND "year" BETWEEN 2015 AND 2021 ORDER BY "year"

SELECT "year", subcategory, amount FROM ag.ers_farm_income WHERE state='US' AND category ILIKE '%government payment%' AND "year" BETWEEN 2017 AND 2020 ORDER BY "year", subcategory