For area farmers, 2019 brought a year of historic rainfall leading to late planting, replanting, and even prevented planting in some cases. Combined with already low prices and ongoing trade concerns, it’s easy to see why the farm economy is struggling. On May 23, 2019, Agriculture Secretary Sonny Perdue announced the U.S. Department of Agriculture would once again provide up to $14.5 billion in direct assistance payments to farmers impacted by foreign retaliatory tariffs through the Market Facilitation Program. Until last week, few details were known regarding USDA’s 2019 MFP.
2018’s initial MFP provided a $12 billion aid package including direct payments to farmers, surplus food purchases and market promotion efforts. The 2018 MFP had a significant impact on farm income during the year. Examining Southeast Kansas Farm Management Association data, comprised of actual farm-level data from operations located in 20 counties of southeast Kansas, farms in the program had an average net farm income of $129,983. This was an increase from $110,402 and $106,660 in 2016 and 2017, respectively. While the recent bump in net farm income looks positive on the surface, a further examination reveals the average 2018 payment from the MFP to be $44,614. Without the MFP payment, the average net farm income for 2018 would have been $85,369. This would have been the lowest average net farm income experienced by area farms since 2015, and if 2015 is ignored, 2006 would become the most recent year that the average net farm income fell below $85,369. Without the government assistance from the MFP, 2018 farm incomes would have told a much different story.
2019’s MFP will have some key differences when comparing to 2018. For crops, 2018 MFP payments were based on actual bushels produced multiplied by specified national rates. Using common area commodities, a farm in 2018 was paid $1.65 for every bushel of soybeans, $0.14 for every bushel of wheat, and $0.01 for every bushel of corn. A bumper soybean crop in 2018 for Four State farmers led to the substantial payments from the MFP. With a goal to avoid influencing 2019 crop planting decisions, USDA designed the program to be based on per-acre payments for each county, taking into consideration the mix of crops found within each county. The theory is that counties with a higher proportion of crops negatively impacted by tariffs and trade concerns will have a comparatively higher payment. The key takeaway here is that within a county the per-acre rate is the same whether the acres are planted to corn, wheat, soybeans, grain sorghum, canola, cotton, alfalfa, or other “non-specialty” crops. Acres must be planted by Aug. 1 to qualify.
USDA released the 2019 MFP per-acre rates last week for counties nationwide. Many area counties have per-acre rates ranging from the mid-$40s to mid-$60s. The first round of payments for “non-specialty” crops will be made in mid-to-late August, comprised of either $15 per acre or 50 percent of the county per-acre rate, whichever is higher. With most county rates well above $30, the majority of area farmers will see 50 percent of their county rate paid in August. USDA will re-evaluate as the year progresses and make two potential additional payments if conditions warrant, likely in November 2019 and January 2020. These additional payments are not guaranteed by any means.
For specialty crops such as fruits and nuts, producers will see a per-acre payment based on 2019 acres of fruit or nut bearing plants. Other notable rates include $0.20 per hundredweight for dairy producers based on production history and $11 per head for hog producers based on the number of live hogs owned on a day selected by the producer between April 1 and May 15. In addition, farmers who claimed prevented planting and then planted the acres to a qualified cover crop by Aug. 1 will be eligible for a $15 per acre payment.
Another important difference between the 2018 and 2019 programs are the increased payment limitations for 2019. A $250,000 per entity or person limitation exists for each of the three categories (non-specialty crops, specialty crops, dairy and hogs). These are up from $125,000 in 2018, however no entity/person can receive more than $500,000 in MFP payments for 2019. Sign-up is set to begin Monday, July 29 and go through Dec. 6. For more information or a complete list of county rates, contact your local FSA office or visit www.farmers.gov/manage/mfp. If 2018 is any indicator, the MFP will likely have a significant impact on farm incomes this year. On a per-acre basis, it is possible the 2019 MFP payments will not exceed 2018 MFP payments, especially for soybean-heavy operations, but it is impossible to determine without knowing each producer’s situation and whether or not the additional 2019 payments will be made.
(Dillon Rapp is an extension agricultural economist with the Kansas Farm Management Association based in Chanute. For more information about the Kansas Farm Management Association, visit agmanager.info/kfma.)