USDA agencies toil to soften ag's economic blows
WEST FARGO, N.D.—U.S. Department of Agriculture checks to farmers will play a vital role in economic survival in 2019, a year of devastating wet conditions and marketing losses due to a tariff trade war with China.
Most of the money that flows to farmers comes through the USDA's Risk Management Agency. The USDA's Farm Service Agency delivers most other support programs, including Market Facilitation Program payments to offset the farm effects of a tariff war.
During a panel discussion at the Big Iron Farm Show on Tuesday, Sept. 10, Martin Barbre, RMA administrator, noted that an advantage for farmers is that many of the agency heads are farmers. He said crop insurance adjusters and companies will be on the front lines, deciding how farmers will qualify for prevented planting policies.
Barbre said the country already has paid out about $2.5 billion in prevented planting payments, of which 90% are related to excessive flooding and moisture.
Barbre noted several beneficial decisions in the department, and support from Agriculture Secretary Sonny Perdue, in cases that can benefit weather-struck farmers, as long as the decisions don't allow "double-dipping" of benefits.
Kathy Sayers, chief of staff for Richard Fordyce, administrator of the USDA's Farm Service Agency, replaced her boss on the USDA panel.
Sayers said she has been "amazed" about how quickly the FSA staff has gotten out payments. The agency has hired 1,300 individuals since Oct. 1, 2018, but has only gained a net of 200 people because of attrition and retirements. She said the agency may need to hire more temporary employees to get the work done during critical times.
North Dakota FSA State Executive Director Brad Thykeson said the agency, due to staff limitations and workflow, must put a higher priority on MFP programs that get funds out to farmers faster and make that a higher priority than paperwork for Price Loss Coverage and Agriculture Risk Coverage programs, which don't pay immediately.
Thykeson acknowledged farmers are seeing quality problems in their cereal grains because of excess moisture. He said farmers have been using Marketing Assistance Loan Programs delivered the "bad news" that the government imposes discounts on commodity loans. "We can make a loan on it, but you're also going to have to be delivering a quality product if you forfeit on that loan," he said.
The ARC compensation is based on the USDA's National Agricultural Statistics Service numbers. The USDA is looking at how quality adjustments will be counted. "If Mother Nature had played well and we had good hard red spring wheat and good test weight corn, we probably wouldn't be talking about it."
One farmer in the crowd said he wasn't happy with NASS figures, which are used in developing an August crop report, which many felt overstated the corn crop and made markets slide. "It's really tough to take that call," he says, referring to the NASS surveyors.
Sayers said that for farmers signed up for the MFP trade payments, 60% of the payments have been paid out. The next payments will come in November and January, if needed.
North Dakota received about $400 million in an earlier MFP for 2018 trade damage.The FSA may distribute some $500 million in a new round of payments in the state, according to an economist at North Dakota State University.
A lot of data
Sayers said the FSA's economists look at "a lot of data" to decide MFP rates for particular counties, based on trade injuries.
The Washington Post on Sept. 9 reported that "senior government officials, including some in the White House," are concerned about the legality of Trump's MFP. The USDA authorized $12 billion for the 2018 losses. The second round of payments is expected to hit $16 billion in three rounds of payments.
About $11 billion has been paid, including $400 million in North Dakota.
The payments come from the Commodity Credit Corp., which distributes the money through the FSA.
The CCC has an annual cap on CCC payments of $30 billion. The Post story said some "unnamed officials" think the CCC is supposed to be for "substantially more limited programs." The Office of Management and Budget has asked the Department of Agriculture to provide more "legal reasoning" for the effort. A USDA spokesman, in a statement, said the OMB issues are "already resolved."
Sayers declined to speculate on future administrative authority to make MFP payments, said the issue is discussed "all of the time" at the top levels in the USDA.