University of Illinois ag policy specialist Jonathan Coppess and ILLINOIS Extension Farm Broadcaster Todd Gleason discuss the USDA CFAP coronavirus direct payment announcement.
CFAP payments for corn and soybeans max out at 1/2 of total production and are subject to other payment limitations. The calculation compares 1/2-of-total-production to 100% of total-unpriced-inventory on January 15th. The smaller of those two numbers is multiplied by the payment rate to attain the full CFAP payment. FSA will provide a spreadsheet for the calculation and other related paperwork starting May 26, 2020.
$0.33.5 for corn
$0.47.5 for soybeans
CFAP funds will be distributed in two checks. The first will be 80% of the full amount. The second will be up-to-the remaining 20% depending on available funding. It could be prorated to a smaller amount.
This payment rate schedule was developed by University of Illinois Ag Economist Gary Schnitkey. The payment schedule is not Illinois specific or an all-inclusive commodities list. See farmers.gov for USDA CFAP details.
NOTE - the video above includes a playlist. Use the menu icon in the upper right-hand corner of the video to see other webinars from the farmdoc Daily Live series.
farmdoc Daily LIVE
In this series of webinars, the University of Illinois farmdoc team discusses the impact and influence of COVID-19 on farmers and agriculture.
The following webinars may be found in the video playlist at the top of the page. The titles below are linked to the corresponding video and the slide set.
E1 | Coronavirus & Ag - Overview
The Farmdoc team led an overview of COVID-19 impacts on agriculture. The stage was set by Scott Irwin with an overview of the COVID-19 and the economy. Nick Paulson discussed consumer responses, Gary Schnitkey described supply chain concerns, Jonathan Coppess discuses policy actions, and Todd Hubbs described grain market concerns.
E2 | Lessons from Infectious Disease and Livestock
Jim Lowe, an expert in infectious diseases in the College of Veterinary Medicine at the University of Illinois, shares his perspectives on Coronavirus as it relates to the lessons already learned from the livestock sector. Recent important updates related to COVID-19 and agriculture were shared by Gary Schnitkey.
E3 | Financial Perspectives on Agriculture and Coronavirus
Nick Paulson, a farmdoc team member, will lead a discussion of COVID-19 concerns related to agricultural finance. Nathan Kauffman (Vice President and Omaha Branch Executive) and Cortney Cowley (Economist, Regional Affairs Department), from the Federal Reserve Bank of Kansas City, will be guests and provide important perspectives. Any recent important updates related to COVID-19 and agriculture will be shared.
E5 | Outlook and Farm Policy Moving Forward
USDA Chief Economist Rob Johansson outlines the economic impact of COVID-19 on the agricultural to date and some of the programs in place to aid the sector, and University of Illinois Ag Policy Specialist Jonathan Coppess provides analysis of the policy provisions and process.
E6 | Acreage Decisions 2020
Todd Hubbs, ILLINOIS Extension Ag Economist Gary Schnitkey, ILLINOIS Extension Ag EconomistTodd Hubbs provides the latest outlook on acreage decisions for 2020. Gary Schnitkey examines the cash flow and management decisions associated with 2020 acreage shifts.
E7 | COVID–19, Ag Assets, & Lending Markets
COVID-19 is affecting America’s farmers, ranchers, and landowners in numerous and varied ways. Join Jackson Takach, chief economist with Farmer Mac, and Bruce Sherrick, Professor and Director of the TIAA Center for Farmland Research and a farmdoc team member, as they explore the drivers and linkages between the global pandemic, the related economic stoppage, farm assets, and agricultural finance.
E8 | Crop Supply Logistics this Spring
Scott Irwin will be joined by Jeff Bunting of FS Growmark to discuss crop input supply and logistics issues that may arise due to the coronavirus pandemic. Scott will provide a brief overview of recent grain market developments and Jeff will then provide an overview of crop input supply and logistic issues.
E9 | Rural Economy Stimulus: CARES and PPP Funding
The CARES Act includes a number of programs targeted at supporting small businesses. Rural businesses in Illinois have choices about participating in the Paycheck Protection Program (PPP). Join Bob Rhea and Dale Lattz from FBFM, and Nick Paulson from the farmdoc team, as they identify the key components of this new legislation and the impact on business owners.
E10 | Getting the 2020 Crop Planted
Even with good corn and soybean yields following record-late planting in 2019, there is increased urgency in getting the 2020 crops planted on time. Emerson Nafziger will talk about the start of the 2020 planting season, current conditions, and planting date, depth, and seeding rate decisions in the coming weeks.
E11 | The Impact of the Coronavirus Pandemic on Food Prices and Retail Food Sector
The retail food sector has been put under substantial stress by the coronavirus pandemic. What started out with runs on toilet paper quickly escalated to empty meat and bread aisles at grocery stores. Scott Irwin will join Jayson Lusk of Purdue University to discuss how the pandemic has impacted food prices and logistical issues in this crucial sector of the American economy.
E12 | An update on Policy and Political Outlook for Coronavirus Pandemic Relief
Less than a month ago, Congress enacted the CARES Act to provide $2 trillion in relief for the wide range of challenges from the Coronavirus pandemic. Questions remain about implementation, the outlook for additional relief, and a general perspective on the political and policy discussions at the federal level for the food and agricultural sector.
E13 | Nick Paulson and Joe Glauber on Ag Trade
U.S. agricultural trade policy, China's push to reconfigure international supply chain lines, the entrance of Brazil and Ukraine into the commodity export markets, and the coronavirus pandemic have all disrupted the once relatively stable U.S. corn and soybean export markets. University of Illinois Agricultural Economist Nick Paulson and IFPRI's Joe Glauber will explore the policies and fundamentals behind the changes and probe the future impact.
E15 | US-China Agricultural Trade and Shifting Consumption Patterns in China
Over the past two years, policy actions have had major impacts on trade in agricultural products between the US and China. In addition, shifts in consumption patterns are changing the demand for agricultural products by Chinese consumers. Nick Paulson will be joined by Wendong Zhang, assistant professor in Agricultural Economics at Iowa State University, for a discussion of these issues and how they impact the outlook for U.S. agricultural exports.
E16 | Agricultural Law Issues and the COVID-19 Pandemic
The COVID-19 pandemic has sent shockwaves through the agricultural production system and raised unique legal issues for input suppliers, crop and livestock producers, and processors. The Director of the National Agricultural Law Center, Harrison Pittman, along with University of Illinois Agricultural Lawyers A. Bryan Endres and Jonathan Coppess, will explore the pandemic’s impact on the legal enforceability of agricultural contracts, protections afforded under commodity-specific statutes such as the Perishable Agricultural Commodities Act and the Packers and Stockyards Act, regulatory compliance issues with potential large-scale euthanasia of livestock, state-level meat inspection laws, application of the Defense Production Act in the agricultural context, and a new generation of farm foreclosure moratorium laws. There will also be an update on additional relief measures, payment limits and current policy discussions at the federal level.
E17 | Eligible Uses and the PPP Loan Forgiveness Process
Many businesses, including farmers and other agricultural enterprises, applied for and received Payroll Protection Program (PPP) loans. To qualify for loan forgiveness, loan funds can only be used to pay for certain expenses. Join Bob Rhea and Dale Lattz from FBFM and Nick Paulson from the farmdoc team to discuss these issues.
E18 | Farm Policy, Farm Incomes, and Upcoming Management Decisions
An Update on farm policy will be provided with a discussion of the Coronavirus Food Assistance Program. This webinar will also include an income outlook given different potential payment schemes. Difficulties in making 2021 decisions given the current policy environment will be described.
E19 | What is the Outlook for the Ethanol Industry Going Forward
The ethanol production industry has been severely impacted by demand destruction caused by coronavirus restrictions. The purpose of this webinar is to examine the financial damage done to the industry and the outlook for recovery through the end of 2020. Scott Irwin and Todd Hubbs of the farmdoc team will be joined by Eric Moseby, General Manager of Lincolnland Agri-Energy in Palestine, Illinois to discuss these issues.
E20 | Coronavirus and The Pork Industry: Perspectives from The Maschhoffs
Bradley Wolter, CEO of The Maschhoffs, will share his perspectives on the impacts that Carnivorous has had on the pork industry, with discussion on human resource, pig health, and supplier issues. Gary Schnitkey will provide an economic update as well as background on recent trends in the pork industry.
It sure looks like COVID–19 is going to do some serious damage to the nation’s corn and soybean farmers. A new study from the University of Illinois estimates the damage at about eight billion dollars. This was the case on May the 5th.
That eight billion is a decline of nine percent across the nation and ILLINOIS Extension Ag Economist Gary Schnitkey says it does not include losses that have already piled up for corn and soybeans still in the bin from last year, "If you look at the 2019 crop, obviously there are losses on the 2019 crop from the sales value, we were looking forward at the 2020 crop and getting a feel for the losses on the 2020 crop."
That loss Gary Schnitkey is talking about is the difference between what farmers were expecting to make pre-COVID–19 and what they are likely to make post-COVID–19 on the 2020 corn and soybean harvest, "So we took the futures prices on that date to reflect what harvest prices would look like, projected forward the market-year-average based on that harvest price, and came up with estimates of losses given those futures prices today (May 5, 2020). We kept the trend-line yields the same, so the calculations would only show the (COVID–19) price decline as what’s happened to revenue."
The farmdoc Daily article shows these projected lost revenues by crop, but notes that, conceptually, this does not work in practice because commodity programs make payments on base acres combined not actual planted acres. Still, it provides an important guidepost. The per acre revenue difference for corn from February to May is $107 per acre. Again these are national averages and do not include any government payments. For soybeans, it is $36 per acre.
Combined the total nationwide loss from February to May is about $12 billion for the 2020 corn and soybean growing season. A projected PLC payment for corn covers about one-third of that loss says one of the articles co-authors, Ohio State University Ag Economist emeritus Carl Zulauf, "The eight-billion-dollar estimate in the article is after we’ve taken out our estimate of the PLC payment. The PLC payment right now is only for corn at the average. We do two estimates. One for a low price and one for an average price relationship. But the PLC payment at the average price relationship is covering about one-third of the total cost. So, in other words, it is around twelve-billion, but if you net it out you get to the eight-billion-dollars."
The eight-billion-dollar loss uses a basis calculation related directly to crop insurance. Stay with me here. It is the Market-Year-Average Cash Price minus the Crop Insurance Harvest Price. That’s 8 under for corn and 2 under for soybeans. If you use a wider basis under a low price scenario, say where there is a burdensome ending stocks number, those are 28 under for corn and 43 under for soybeans. In that case revenue loss is over $10 billion.
You may read the article summarizing the impact of COVID–19 on a corn and soybean farm on the farmDOC daily website.
U.S. Secretary of Agriculture Sonny Perdue sent letters to the nation's governors and meat supply-chain stakeholders Tuesday night detailing what is expected from them as it relates to President Trump's Defense Protection Act order.
The signup period for a program called WHIP+ (whip-plus) is open for farmers suffering losses because of natural disasters during the last two years.
WHIP+ is the continuation of a federal disaster aid program. Most farmers in the corn belt will recall it as the program used last year to bump up prevent plant payments by 15%. Congress introduced WHIP+ last summer, then during the December appropriations process, it dropped in an additional $1.5 billion dollars in funding and expanded qualifying crop losses to include losses due to excessive moisture and D3 and D4 drought.
Producers who suffered either of these types of losses in 2018 or 2019 can apply for WHIP+ assistance through a local Farm Service Agency (FSA) office today says University of Illinois Research Specialist Krista Swanson, "So, the program provides payments for yield losses but there are still a lot of unknowns. The signup period started March 23rd. However, FSA offices across the state do not have what they need to process the applications. So, there is a copy of the application online that people can look at and we are hearing that some counties are going ahead and filling those out with farmers. Other counties are just taking names and putting people on a list."
Again, although USDA opened signup March 23, 2020, county offices are not yet able to process applications and do not have an estimate on when they will be equipped to do so. Some counties are filling out the draft paperwork, others are simply taking names. The application is not difficult says Swanson, "They have provided a payment calculation and we can tell from it that a substantial yield loss will be required. It is based on the expected value of the crop to the value of the crop harvested. This is also reduced by any insurance indemnity payments. So, again you would have had to have a loss per the terms of the calculation that exceeded any crop insurance payment. We do not know what the value rate is in the calculation."
That missing value means almost every farmer should sign-up for WHIP+. Farmers can contact county FSA offices to express intent to apply and ask to be notified when applications can be processed. The USDA has not published a sign-up deadline. The WHIP+ program is not related to the coronavirus direct payments Congress funded through the recently passed CARES act.
Wide-spread concern exists over the large decline in US share of world corn, soybean, and wheat exports (see Figure 1). Moreover, quantity of corn and wheat exports have never consistently exceeded their early 1980 levels (see Figure 2). Tariff wars have heightened the concern. Long term impact of the tariff wars is a concern, but this article argues that graphs such as Figures 1 and 2 exaggerate the decline in US agriculture’s international standing and mask key relationships that frame private and public decisions. Data cited in this article come from PSD (Production, Supply, and Demand website).
Reasons for Exaggeration Growth in domestic US use is ignored. US consumption of meat, livestock products, and especially biofuels has grown, displacing exports, everything else remaining the same. Zulauf estimates US corn exports are 1.4 billion bushels smaller than if US corn market trends of 1984–2004 had continued to hold (farmdoc daily, 11/20/2019).
US policy changes are ignored. In particular, CRP (Conservation Reserve Program, which was authorized in 1985, pays for taking environmentally sensitive cropland out of production. Fewer cropped acres mean prices are higher than they would otherwise be. Higher prices reduce demand for exports more than domestic demand, resulting in fewer exports or slower growth in exports.
Broader markets in which a crop exists are ignored. Corn is a feed grain, soybean is an oilseed, and wheat is a food grain. Corn and soybeans are preferred among these crops around the world. However, their share of harvested feed grain-food grain-oilseed acres has increased more in the US (from 50% in 1972–1976 to 71% in 2015–2019 vs. 15% to 29% for rest of the world). Faster growth in preferred crops imparts an advantage to the US.
A more encompassing and likely more accurate measure of US agriculture’s international role is its share of aggregate world feed grain-food grain-oilseed production.
US share of world feed grain-food grain-oilseed production has declined, but by much less: from 19.3% in 1972–1976 to 16.2% in 2015–2019 (see Figure 3 and Data Note). This conclusion also holds for relative share decline. Relative decline in US share of world corn exports is –52%. It is calculated as percent change in 2015–2019 share from the 1972–1976 share, specifically [1 – (34.9% / 72.8%)] (percent values from Figure 1). Relative decline in US export share is –62% for soybeans and –69% for wheat. In contrast, relative decline in US share of world feed grain-food grain-oilseed production is only –16% (1 – (16.2% / 19.3%).
Because magnitude of a share matters, it is important to examine a share over its range of values (0% to 100%), as Figure 3 does. But, such a graph can mask important smaller, shorter-run changes. Figure 4, a smaller magnitude picture, clearly reveals 2 periods of decline. The first peak-to-trough is from 1982 (20.9%) to 1991 (16.3%). It closely follows the 1973–1980 crop prosperity period. The second peak-to-trough is from 2007 (17.6%) to 2015 (15.9%). It largely overlaps the 2007–2013 crop prosperity period. However, declines in 2018 and 2019 beg a question, “Have the tariff wars undone a possible stabilization in US share following large price declines since 2012?” Between the two declines, US share partially recovered, likely due in part to the large reduction in US prices due to policy changes enacted in the 1985 farm bill.
Role of US Acres Since the early 1980s, all growth in cumulative US production of feed grains, food grains, and oilseeds has come from yield as harvested acres declined by 26 million (see Figure 5). Since 2000, harvested acres have essentially not changed in the US while increasing by 301 million in the rest of the world. The constraint on US acres reflects both bioclimatic factors and public policy. It seems unlikely to change in the near future. The constraint means, if US domestic consumption grows faster than US yield, prices will increase, giving rest of the world an incentive to bring acres into production. This scenario played out as the US expanded its biofuel markets since 2000.
A widely-expressed concern is the decline in US share of world corn, soybean, and wheat exports.
This decline however exaggerates the decline in US agriculture’s international standing. It also masks key relationships that frame private and public decisions.
A more accurate perspective is US share of world feed grain-food grain-oilseed production. This share has declined but by much less than US share of world corn, soybean, or wheat exports.
The decline occurred in two periods: 1982–1991 and 2007–2013. The second decline has, so far, been much less than the first. But, declines in 2018 and 2019 prompt the question, “Is the second decline resuming, especially in light of the tariff wars?”
A key feature of contemporary US agriculture is a constraint on cropped acres. Given this constraint, growing US demand faster than yield means most of the benefits accrue to the rest of the world as they bring more acres into production. Such has occurred since 2000 as the US expanded its biofuels markets.
The US cropland constraint prompts the following policy questions / issues. Given this constraint,
What is the appropriate role and funding for export promotion programs?
What should US biofuels policy be, in particular the size of mandated markets?
What should be the size and goal of US conservation land retirement programs?
What is the appropriate role and funding for public agricultural research?
These issues span multiple titles in the farm bill, suggesting the US cropped acres constraint could be a foundation theme directing debate over the next farm bill.
Congress has moved to allocate additional money to the Paycheck Protection Program and farmers could benefit.
Bob Rhea of the Illinois Farm Business Farm Management Association says some farmers should be able to apply for the government-backed SBA loans, “We believe farmers are eligible to participate in the PPP, the Paycheck Protection Program, under the CARES Act. They don’t specifically identify agriculture as a participating entity but in the very broad scope of things they say any eligible business with less than 500 employees is eligible to participate in the Paycheck Protection Program.”
PPP is administered through local banks and is available through Farm Credit offices. Bob Rhea says it is a loan but one that can be easily forgiven. Here’s how self-employed farmers and others would make the paycheck calculation, “It does include a very unique forgiveness provision for a Small Business Administration loan. It is really based on eight weeks out of 52. Approximately 15% of their 2019 income is the part can be forgiven for a self-employed person. For those that are seeking loans for their payroll, it will be measured on the payroll they incur in the eight weeks on the loaned funds after they are disbursed.”
Rhea says there are a few other pieces that can be used to generate the loan-forgiveness provisions of the Paycheck Protection Program. These include mortgage interest, rents, and utilities costs. Seventy-five percent of the disbursed funds must be used for payroll expenses. Check with your local bank or Farm Credit office to see if your farm qualifies.
ILLINOIS Extension has been hosting a hemp production webinar series highlighting growers and industry partners. Phillip Alberti is part of the state extension commercial ag-team. He's been coordinating the series and the webpage, "On our website we are going to be posting these videos online and we already have several videos from the series posted online. So, we encourage you to go.illinois.edu/hemp and you can find all of those videos recorded and available right now."
Again, to see the hemp grower resources and view the production videos you may visit go.illinois.edu/hemp. The site is hosted by ILLINOIS Extension.