Hoeven stresses importance of basis in MFP calculations
Senate Agriculture Appropriations Subcommittee Chairman John Hoeven, R-N.D., has urged Agriculture Department officials to consider the issue of basis — the difference between the local cash price of a commodity and the price of a specific futures contract in the same commodity at any given point in time — in the calculation of aid to producers in the the next round of Market Facilitation Program payments.
The pressure from Hoeven to use basis could affect how USDA divvies up some of the $16 billion that the Trump administration plans to provide farmers who have lost export sales due to retaliation against President Donald Trump’s tariffs on the products of other countries, particularly China.
At a Senate Agriculture Committee hearing last week with USDA Chief Economist Robert Johansson, Undersecretary for Trade and Foreign Agricultural Affairs Ted McKinney, and Chief Agricultural Negotiator Gregg Doud, Hoeven stressed that the disruption in foreign market access impacts some regions and producers, including North Dakota soybean growers, more heavily than in other parts of the country, and said the assistance should account for these increased costs.
“Our soybean producers put in a lot of work to develop trade relations in China, and in a normal year, North Dakota would send about $1.5 billion worth of soybeans to China,” Hoeven said. “Losing that access means farmers face real costs as they work to find new customers, which should be reflected in the trade assistance.”
Economists have noted that soybean producers in the Northern Plains have suffered losses because China, through West Coast ports, was the main market for their soybeans. Farmers in the middle part of the country send their soybeans down the Mississippi to southern ports that send products to a variety of countries around the world.