Farmer’s Plan For Market Facilitation Payment

The trade war with China is dragging on with no end in sight. Because farmers, especially soybean farmers have taken the brunt of the fallout from the trade war there is talk about another round of Market Facilitation payments. The USDA has announced that there will be another Market Facilitation payment but we do not know any of the details yet. Secretary of Agriculture Purdue has said that it will be designed to not skew or distort planted acres.

Remember earlier this week there was a rumor that there would be a $2 a bushel payment on soybeans. Traders then assumed that it would be on every bushel produced this year. The assumption was that would encourage farmers to plant more acres of beans this year, especially the acres that could not be planted to corn. With a USDA projected bean carryover of almost a billion bushel the last thing we need is more bean acres!

I got a call from a farmer yesterday morning and in about 10 minutes we came up with a plan that would help farmers and not distort market signals telling farmers to plant fewer bean acres this year. All you have to do is tie the Market Facilitation payment to the history of planted soybean acres on a farm rather than how many bushels that were produced this year.

Assume you had a 160 acre farm unit that had a 5 year history of being half corn and half soybeans. That would mean an average 5 year history of 75 acres of beans. Then if you had a trend adjusted yield of 55 bushels an acre your production would be 4,125 bushel of beans on that farm unit. The USDA could use that production for a Market Facilitation payment.

The payment could be earned no matter what crop was planted or if the farmer had to take the prevented plant because of the weather. The payment could go to the farmer that was actually farming the land this year. This would not distort any planting decisions this year and it would help the farmer. What would your plan be?