Corn Belt farmers had a lot of Christmas presents under their tree this year, thanks to Santa Congress. Although House and Senate Farm Bill negotiators pushed the envelope on completing their work to create a significantly bi-partisan farm and food legislative policy, it was signed into law just hours before the government shut down on Friday night.
Nearly every farm organization which offered congratulations and thanks for a job well done, mentioned that the 5-year policy offers stability to the farm economy. Most of that is in the tweaks that Congress approved in the farm safety net that keeps enough farmers in place to ensure a satisfactory food supply.
The familiar ARC and PLC programs will allow farmers to make adjustments to find the right formula for their farm, and make intermediate changes that were not allowed when those programs were introduced in the 2014 Farm Bill. Not big changes, but ones, such as updating yields, will tighten the safety net to prevent farms from falling through.
Another change increases the loan rate on corn and soybeans. The loan rates are so low that farmers will not relinquish their grain as a payoff of the loan, but the higher rates will allow additional cash flow to finance a farming operation while a long-term marketing plan is being implemented.
In a related note, Congress raised the loan limits for operating and land purchase loans which can be obtained from the Farm Service Agency, working in concert with local banks to ensure younger farmers have adequate financing to begin farming.
Another Christmas gift, not from Congress, but the USDA, was the second half of the Market Facilitation Program payment, designed to replace lost commodity sales revenue when the trade war with China ramped up. There was early speculation within agricultural circles that the second payment would either be diminished or not paid at all. However, the full payment was made on 2018 production.
By far and away the payment benefited soybean farmers, and with a $1.65 per bushel payment on this year’s crop, most farmers will be able to record revenue of more than $10 per bushel. And that money is coming at a critical time for Corn Belt agriculture.
With soybean prices projected at an $8.50 average for 2019, the added revenue will help many farmers with needed cash flow in a year that ag economists say will deliver negative profitability. Since cash rents have been slow to fall, and with substantial costs of crop production, expected prices for corn and soybeans in 2019 will not cover production costs.
While some farmers may have visited the machinery dealer at the end of this year to spend some of their income from high yields, early crop sales, and the trade aid payment, they will find a Jekyll and Hyde difference between 2018 and 2019.
But all will be thanking politicians for the beneficial Christmas gifts.