MEDIA RELEASE
September 12, 2002
Written By Kent Thiesse, U of M Extension Service
(507-389-8141)
Government Farm Payments Will Provide Less Income
When the new Farm Bill was passed a few months ago, there was considerable discussion by the National news media about the large amount of extra money that will be paid to farmers under the new Farm Program. While the new Program does create some new potential farm program payments, it modifies some payments, and eliminates other payments. When everything is said and done, it is quite likely that many farm operators will receive less income from government farm payments in 2002 than they have in the previous three or four years, according to Kent Thiesse, University of Minnesota Extension Service.
Thiesse said that farm operators will receive their 2002 "direct payments" for the new farm program after landowners make a six year (2002-2006) base acreage and payment yield decisions on a particular "farm unit" at County Farm Service Agency (FSA) Offices. The payment rate for corn for the new "direct payments" is $.28 per bushel, calculated on existing payment yields and paid on 85 percent of eligible corn base acres. However, for 2002, farm operators have already received a $.26 per bushel AMTA payment for corn last December or January. The AMTA payment for 2002 will be deducted from the new "direct payment" for corn, wheat, and other existing program crops. Thiesse says the net payment of $.02 per bushel for corn in 2002 represents about $2.00 per corn base acre for the new "direct payment" that will be paid this Fall.
Thiesse indicated that soybeans and oilseed crops are now eligible to become crop base acres in the new Farm Program. The "direct payment" rate for soybeans is $.44, which will be paid on 85 percent of the new base acres on a payment yield that is about 78 percent of 1998-2001 average yields that are documented at County FSA Offices. Thiesse estimates that the average 2002 "direct payment" will be about $12.00-$14.00 per acre of eligible new soybean base in Southern Minnesota.
Thiesse points out that the trade-off for soybeans being added as a program crop is that the National CCC loan rate for soybeans was lowered from $5.26 per bushel to $5.00 per bushel in the new Farm Program. County soybean loan rates in Minnesota were lowered by $.25 per bushel from 2001 to 2002. This will result in approximately $12.00-$15.00 per acre less income for soybeans in 2002 from CCC loans or loan deficiency payments (LDP"s). Thiesse said the National CCC loan rate for corn did increase $.09 per bushel; however, the Minnesota County loan rates only increased $.06 per bushel.
Thiesse emphasized that the new "counter-cyclical" payments that were initiated with the new Farm Program may not even occur this year. These payments for corn and soybeans in 2002 are based on the 12 month National average price from September 1st, 2002 through August 31st, 2003. Advance "counter-cyclical" payments scheduled for this Fall and February, 2003, are based on the projected National average prices at those times. It is likely that current average prices for corn and soybeans are high enough that there may not be an advance payment this Fall or next February.
In addition, Thiesse says that producers in 2001 received a "market loss assistance payment" of about $28.00-$32.00 per corn base acre and "oilseed payment" of about $5.00-$6.00 per acre on every planted acre of soybeans. These payments do not exist in 2002 with the new Farm Program.
Thiesse indicates that the good news for Southern Minnesota farmers is that most corn and soybean yields will be above average and commodity prices are at the highest levels in recent years. This will add some crop value to every acre of production. However, for growers that plan to store most of their 2002 production after harvest to sell later, the lower levels of government farm payments this Fall could cause some tight cash flow situations. Thiesse advises producers to consider taking advantage of the current favorable crop prices to sell some corn and soybeans at harvest to meet cash flow needs.
Contact your local Extension Office for more information on estimated farm program payments.