URBANA, Ill. — Uncertainty continues to swirl around a pair of moves by the federal government addressing trade mitigation aid and disaster assistance.
Jonathan Coppess, University of Illinois clinical professor of law and policy, spoke of the known and unknown of the Market Facility Program part two and the recently passed disaster assistance legislation during June 12 webinar hosted by the University of Illinois’ farmdoc and sponsored by the Illinois Corn Growers Association.
Here’s what Coppess had to say about the U.S. Department of Agriculture and congressional moves.
What We Know About MFP 2
- USDA is going to make about $14.5 billion in payments using a single county rate. So, regardless of what crop planted that acre will get the same payment. They’re trying to decrease the impact on planting decisions, but it does require that a crop be planted.
- Any commodity listed in the farm bill for the Agriculture Risk Coverage or Price Loss Coverage payments are going to be included in this and that means included in the county rate calculations somehow and all of these acres planted.
- Payments acres in 2019 cannot exceed the payment acres on the farm for the 2018 MFP. This restriction is designed to prevent more acres moving into covered crops, particularly from grasslands or lands typically not farmed.
- USDA does not have the legal authority under the Commodity Credit Corporation to make MFP payments to producers for acreage that is not planted.
What We Don’t Know About MFP 2
- In those cases where farmers were prevented from planting but puts in a cover crop, they may add some sort of minimal MFP payment for those acres that are put into a cover crop. Then there’s some mention of the need that it’s got to be a cover crop for harvest which may cause issues with the prevent plant insurance. Talk to your insurance agent about that before you do anything, but there may be some requirements for harvest for forage cover crop in that situation.
- The county rates for planted acres have yet to be determined.
- Whatever payment that’s received will come out in three tranches. They’re limited in how much borrowing authority they have under the CCC and because of that they’re stretching these out. We don’t know exactly whether this will be one-third, one-third, one-third or how this will be apportioned, but some will come out this summer, some on November and a third tranche presumably in early 2020.
- This also means that there’s a potential should a trade deal with China or other factors come into play that maybe these last payments won’t be made, but as we saw from last year I think it’s unlikely that all three won’t be made.
What We Know About Disaster Assistance
- Congress approved and the president signed $19 billion in supplemental appropriations for the Disaster Relief Act that includes $3.005 billion to USDA for a wide array of losses resulting from disasters throughout 2018 and 2019. It requires USDA to prioritize how it is allocated.
- USDA plans to provide assistance on prevented planting losses within the confines of its authority.
- It increases the prevent payment factor on crop insurance up to 90% at the discretion of the USDA secretary. So, instead of the 55% for corn and 60% for soybeans, it could go up as high as 90% for those who have prevent plant, or up to 70% for those who did not purchase crop insurance.
- The bill provides assistance as a consequence of “Hurricanes Michael and Florence, other hurricanes, floods, typhoons, volcanic activities, snowstorms and wildfires occurring in the calendar years 2018 and 2019 under such terms and conditions as determined by the secretary.”
What We Don’t Know About Disaster Assistance
- The reality is this is a $3 billion pot, so they are going to have to spread that across all of the prevented planting acres. So, it is really, really unlikely, if not impossible, for 90% to be reached, but it is likely that some increase in the prevent plant payment for those counties because the other key issue that we’re waiting to find out is exactly which counties will this top off on prevent plant qualify.
- Presumably those disaster counties listed because of hurricanes, floods, wildfires and other disaster events are the ones in which this potential top-off of prevent planting will be available. They also include some provisions where there’s a revenue policy they can use the harvest price if it’s higher. Only cotton and wheat had a higher harvest price than the projected price in 2018.