FarmPolicy

April 29, 2017

USDA to Distribute $7 Billion in Farm Bill Payments this Fall

Categories: Farm Bill

Reuters writer Tom Polansek reported yesterday that, “The U.S. Department of Agriculture will pay more than $7 billion of taxpayers’ money to farmers this fall to keep them afloat in the face of low crop prices, agency officials said on Tuesday.

“The USDA released the total on the same day that payments started going out to more than 1.5 million growers of corn, soybeans and other crops, who had enrolled in U.S. safety-net programs to protect themselves from market downturns last year.

Prices for the crops have stayed low in 2016 as massive harvests around the world have increased inventories and intensified competition for exports.”

The Reuters article noted that, “In August, the USDA predicted net farm income in 2016 would fall 11.5 percent from 2015 to $71.5 billion because of low commodity prices. If realized, that would be the lowest since 2009.

“It also would mean that USDA’s safety-net payments accounted for about 10 percent of net farm income for 2016.”

Mr. Polansek added that, “Last year, the agency paid farmers $5.2 billion under the programs to cover weak markets in 2014.”

Also yesterday, Julie Harker reported at Brownfield Online that, “[USDA’s Farm Service Agency (FSA) Administrator Val Dolcini] says more money is going out to farmers than last year, ‘We’re about 50% more than the 2014 crop year and that means we are paying more farmers and more counties around the country. Certainly, corn and soybeans and wheat all had very high levels of payment activity.’

“Dolcini says farms enrolled in ARC have suffered $27-Billion in revenue losses in the last year or so. He admits the ARC and PLC payments won’t make farmers ‘whole‘ but says assistance from Congress on the loan side and USDA assistance in other ways will also help. Funding from the recently passed continuing resolution, Dolcini says, will take care of the FSA loan backlog.”

Audio remarks from Administrator Dolcini can also be heard at the Brownfield link.

The FSA released more specific details regarding the Farm Bill payments for corn yesterday, and noted that, “The following maps show 2014 and 2015 ARC/PLC payments by crop and the average of the payments for the two years. The map of average payments shows how ARC/PLC works to pay different counties over time based on the yields and price in those counties. As this map shows, over time high and low payment rates under ARC-CO are moderated and the pattern tends to be smoothed. This effect is expected to result in further smoothing as the entire 5-year program is completed in future years.

“Approximately 1.7 million farms are enrolled in the ARC/PLC program. In 2014, the ARC-CO program paid approximately 900,000 farms a total of $4.4 billion for all crops. In 2015, the initial ARC-CO program payment run (additional payments are expected later in the year as price and eligibility data become available) is expected to pay approximately $5.6 billion to about 1.2 million farms.

“While not reflected in the maps, the Price Loss Coverage (PLC) program paid approximately $800,000 to about 90,000 farms in 2014 for all crops. In 2015, the initial PLC payment run (additional payments are also expected) is estimated to be about $1.2 billion to over 350,000 farms.”

Similar information from FSA regarding soybean payments can be viewed here, while wheat maps and analysis can be found here.

In addition to the Payment Rate maps, FSA also released Revenue Maps yesterday for corn, soybeans and wheat.

In a tweet yesterday, Todd Gleason noted that, “Interesting ARC County analysis via @usdafsa. One map shows revenue shortfall, the other how well ARC covered it.”

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