COVER STORY Agriculture Weather Disasters


HELP IS ON THE WAY Steven D. Johnson | Iowa State University Extension Farm Management Specialist | sdjohns@iastate.edu


The devastating floods, tornadoes and wet planting conditions throughout much of the Corn Belt in 2019 increases the concerns lenders have for their borrowers. Floodwaters stripped soil from the land needed to grow crops and pasture for livestock. It could take years to return some of this land to full production. Many farmers are storing larger volumes of grain for multiple


years in anticipation of better prices. A few saw floodwaters that eroded their land and contaminated that grain. However, multi-peril crop insurance policies do not cover stored grain. These policies can provide annual revenue guarantees on crops that can cushion against unknown natural occurring disasters, but will not provide additional income to support households. Farmers and ranchers had already weathered five years of


decline in net farm income before these weather disasters. During this same five-year period, farm debt has increased by nearly a third to levels not seen since the 1980s. Expect the farm economy to remain fragile in 2019 as farm profit margins remain tight, production costs are slow to decline and Chinese tariffs continue to limit U.S. trade. Combine these tough financial concerns with this spring’s weather disasters and expect those affected to suffer both physical and emotional distress. Farm and ranch families are often sustained through their


hope and optimism from one year to the next. When natural disasters hit and finances get tight, there is often a rise in anxiety and depression. Lenders could prove critical in helping their borrowers understand the multitude of risk management tools available. Later this summer, two new federally funded programs will


provide financial assistance to those impacted by these natural disasters, as well as the ongoing Chinese tariffs on U.S. farm


production. In addition, annual multi-peril crop insurance coverage provides farmers payments on replant, delayed and prevented planting acres.


New Federal Disaster Funds


In late May, Congress passed Disaster Relief funding totaling $19.1 billion. The new law authorizes USDA to distribute $3 billion for farmer losses stemming from 2018 and 2019 disasters, including grain destroyed by floodwaters. It provides the Environmental Conservation program $558 million and Emergency Watershed Protection program $435 million. Under the Army Corps of Engineers, the law includes just under $2.5 billion total for various flood and hurricane controls, including repairs and emergency operations, as well maintenance and natural disaster repairs such as levees along the Missouri river.


2019 Market Facilitation Program


USDA revealed a second year of tariff aid payments under the Market Facilitation Program (MFP) totaling $14.5 billion to farmers that produce commodity crops, as well as dairy and hogs. The direct payments for crops will be based on reported 2019 planted acres, but cannot exceed their 2018 plantings. Each county will be assigned an MFP payment rate based on historical production. All growers in a county will receive the same rate, regardless of the eligible crop grown, but must plant their 2019 crops. Program payments will be split into three rounds, the first coming by August. The second payment would come in late fall and the third payment in early 2020, respectively. The later two rounds of payments could be cancelled if the U.S. and China can resolve their trade dispute.


8


MIDWEST INDEPENDEPENDENT BANT BANK M BANC com MIDWEST INDEPE DENT MIIBANC..com


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16