Government payments to farmers are forecast to hit their highest level in more than a decade because of the trade assistance being provided to producers this year, and the total could go even higher if Congress, as expected, authorizes a new round of disaster aid.
The Trump administration's temporary Market Facilitation Program, launched last fall to compensate farmers for lost exports of soybeans and other crops due to retaliatory tariffs, will pay out $9.8 billion in fiscal 2019, according to the Congressional Budget Office's latest projection of farm program costs.
The $17.2 billion in total farm program spending that CBO estimates for FY19 doesn’t include additional disaster assistance that Congress is considering for producers harmed by hurricanes and wildfires in 2018. A bill passed by the House would authorize $3 billion in agricultural disaster aid.
Government farm payments have not been this high since 2006, when they reached $18.2 billion.
In fiscal 2018, which ended Sept. 30, farmers received about $9.4 billion in government payments, including disaster assistance.
The CBO analysis projects farmers will switch en masse from the Agriculture Risk Coverage program to the Price Loss Coverage this year.
CBO estimates 84.6 percent of corn base acreage will be enrolled in PLC starting with the 2019 crop year, up from 6.6 percent in 2018. Corn base enrollment in the ARC county option will plunge from 93.1 percent in 2018 to 15.1 percent this year.
PLC payments for corn acreage are expected to jump from $270 million in fiscal 2019 to $2.1 billion by 2021.
Some 96.6 percent of soybean acreage was enrolled in ARC-CO in 2018. This year, 64.1 percent of soybean base is expected to be signed up for PLC, with the rest in ARC.
The 2018 farm bill allows farmers to switch between ARC and PLC starting this year. PLC payments are triggered when the average commodity price falls below the PLC reference price for that crop. ARC payments are triggered only when county revenue for a commodity falls below the average for the previous five years.
The new Dairy Margin Coverage program is expected to pay producers about $311 million in 2019 and $2.9 billion over the next 10 years. Those costs will be partially offset by $136 million in premiums and fees paid by producers this year and $1.6 billion in premiums and fees over the decade.
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