Additional Information on Disaster and Trade-Related Assistance from USDA

A news release from the U.S. Department of Agriculture on Monday provided additional details regarding disaster aid and trade-related assistance for farmers this year.

Background

Last month, when the Department initially announced its intention to spend $16 billion to offset the impact of trade conflicts on American agriculture, many details of the program were still unavailable.  The subsequent passage of a disaster relief measure by Congress that the President signed into law last week, also contains aid for distressed farmers, but uncertainty has lingered on the application of that program as well.

Coupled with an unprecedented wet spring, which has delayed planting, the policy uncertainty associated with the trade and disaster programs has resulted in an added layer of decision making for producers dealing with crop insurance deadlines and prevent plant decisions.

New Details

In yesterday’s USDA release, Secretary of Agriculture Sonny Perdue stated that, “I have been out in the country this spring and visited with many farmers. I know they’re discouraged, and many are facing difficult decisions about what to do this planting season or if they’ve got the capital to stay in business, but they shouldn’t wait for an announcement to make their decisions. I urge farmers to plant for the market and plant what works best on their farm, regardless of what type of assistance programs USDA is able to provide.

“In the coming weeks, USDA will provide information on the Market Facilitation Program payment rates and details of the various components of the disaster relief legislation. USDA is not legally authorized to make Market Facilitation Program payments to producers for acreage that is not planted.

However, we are exploring legal flexibilities to provide a minimal per acre market facilitation payment to folks who filed prevent plant and chose to plant an MFP-eligible cover crop, with the potential to be harvested and for subsequent use of those cover crops for forage.

The update continued in a question and answer format, filling in details with ten key points.

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Farmers who are not able to plant a crop this spring will not get a trade-aid payment and should not expect higher payment levels than normal under prevent-plant insurance, according to a USDA question-and-answer on Market Facilitation Program payments and the new disaster aid released late Monday.”

The DTN article noted that, “The news release and statement from Perdue stated, ‘USDA does not have the legal authority to make MFP payments to producers for acreage that is not planted. To qualify for a 2019 MFP payment, you must have planted a 2019 MFP-eligible crop. Producers unable to plant their crop should work with their crop insurance agent to file a claim.’

“Farmers who file a prevented-planting claim and plant a cover crop, however, could qualify for ‘minimum‘ MFP payment, USDA stated. ‘If you choose to plant a cover crop with the potential to be harvested, because of this year’s adverse weather conditions, you may qualify for a minimal amount of 2019 MFP assistance. You must still comply with your crop insurance requirements to remain eligible for any indemnities received.'”

Mr. Clayton added that, “USDA also tempered expectations from the potential payments for prevented-planting under the disaster bill. The bill gives USDA the authority to compensate prevented-planting losses for 2019 up to 90%. But the Q&A notes, ‘While that authority exists, USDA must operate within finite appropriation limits. It is highly unlikely that the supplemental appropriation will support that level of coverage in addition to crop insurance.’

“USDA stated Congress funded $3.005 billion for the 2018 and 2019 disasters, and requires USDA to prioritize how those funds are spend. USDA intends to provide aid on prevented-planting losses ‘within the confines of our authority.’

USDA also will determine ‘on a case-by-case basis’ whether the department will allow the higher prevented-planting benefits outside of areas that are under a presidential or secretarial disaster declaration.

Yesterday’s DTN article added that, “The disaster bill gives USDA authority to pay farmers higher prevented-planting protection, and also gives USDA authority to allow the ‘harvest price option’ on prevented-planting claims. In its Q&A, USDA stated the department ‘is currently exploring legal flexibility to provide assistance that better utilizes the harvest price in conjunction with revenue and prevent planting policies.'”

And Reuters writer Karl Plume reported yesterday that, “The U.S. Department of Agriculture is looking into ways to allow farmers who have been unable to plant crops due to rains and waterlogged fields to qualify for farm aid payments, Agriculture Secretary Sonny Perdue said on Monday.

“The government agency is exploring options that would allow farmers that file insurance claims on ‘prevented planting’ policies to remain eligible for a partial payment under its $16 billion aid package, Perdue said in a statement.

“But the farmers will need to plant an eligible cover crop, a practice typically intended to prevent soil erosion, Perdue added.”

University of Illinois agricultural economist Scott Irwin also provided context to the new USDA information in a series of tweets yesterday: