USDA’s top lawyers have confirmed that unplanted crop acreage will be ineligible for trade assistance payments under the Market Facilitation Program, a government official tells Agri-Pulse.
USDA is still looking for "creative ways" to include the unplanted acres in MFP, but hasn't found any yet, the official said. Agriculture Secretary Sonny Perdue told reporters on Wednesday that he expected to have a final decision on the MFP eligibility for prevented planting "within a few days."
USDA lawyers took the same position on the unplanted acre issue during discussions with congressional appropriators who were designing a $19.1 billion supplemental appropriations bill that the House ultimately cleared on Monday, said Sen. John Hoeven, the chairman of the Senate Agriculture Appropriations Subcommittee. USDA's Office of General Counsel believes that payments using the department's Commodity Credit Corp. authority must be restricted to crops that have been produced, he said.
Hoeven told Agri-Pulse in an interview on Wednesday that a provision was inserted into the bill to provide disaster relief payments for prevented plantings in lieu of the MFP assistance. Millions of acres of land in the Corn Belt hasn’t been planted yet because of a succession of storms that have prevented farmers from getting into their fields.
“We can’t help on prevented plant acres under the trade assistance (package), which is why it’s in disaster supplemental bill,” said Hoeven, R-N.D.
The concern was that without the prospect for disaster aid for unplanted acres, excluding them from MFP payments could have given farmers an incentive to plant crops they shouldn’t, Hoeven said.
“USDA lawyers said that we could not under CCC provide funding for crops … that weren’t planted,” Hoeven said.
Under the newly revised MFP, farmers will receive payments based on a county rate and their 2019 planted area of eligible acreage. The county payment rates, which have not been released, will be based on USDA's estimate of trade disruptions to that county's mix of commodities.
Some economists have argued that MFP payments should be extended to unplanted acres because the trade war with China has reduced the market prices used to calculate prevented planting benefits under the federal crop insurance program.
Perdue last week left open the possibility that MFP payments could be extended to unplanted acres, although he offered some pessimism on the issue to reporters during a trip to Pennsylvania last week: “The premise of the Market Facilitation Program is … trade disruption damage, so if you don’t have something to sell, you can’t really be impacted by trade (loss),” Perdue said. “That’s the whole premise.”
Farmers who claim prevented planting insurance benefits for corn can receive an indemnity for 55% of the crop’s insured value.
USDA has not released rules for the disaster relief bill, but House Agriculture Chairman Collin Peterson, D-Minn., has said that USDA is expected to use the legislation to increase prevented planting benefits somewhere between the normal insurance limit — 55% for corn — and the 90% maximum set by the bill.
Farmers who didn’t buy crop insurance could be eligible for direct payments of up to 70% of the crop value under the legislation.
Hoeven said the lack of detail from USDA on how the disaster payments will be calculated is intended to avoid influencing farmers' last-minute planting decisions.
But meanwhile, Hoeven is asking USDA to move up the date when farmers can start grazing cover crops or cutting them for hay on prevented-planting acreage. The earliest date is now Nov. 1. Allowing haying and grazing earlier would benefit cattle producers, he said.
In a letter last Friday to Perdue, the American Farm Bureau Federation said the department should consider making unplanted acres eligible for MFP. As an alternative, the department should consider basing payments on historical production rather than 2019 planted acres only, the letter said.
The letter also said that if unplanted acres are ineligible for MFP, then USDA should consider calculating the size of the disaster payments based on the higher of the spring or harvest price.
According to USDA’s latest Crop Progress report, 67% of the expected corn acreage this year had been planted as of Sunday, 10 percentage points behind the previous slowest pace at that point, set in 1995. The five-year average on June 2 is 96%.
Some 39% of the soybean crop had been planted by Sunday; the average is 79%.
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