The USDA has issued additional money to farmers around the country who weren’t able to plant anything this spring. After Ohio suffered its worst weather prevented planting season on record, the additional 10 or 15% in crop insurance payouts is likely welcome news for many.
According to data obtained through a Freedom Of Information Act request, nearly 14,000 policies around the state received additional funds. The dollar figure came out to slightly more than $56.3 million.
Ohio State agricultural economist Ben Brown says the move is tied to another initiative known as the Market Facilitation Program, an effort that provides money to producers negatively impacted by the ongoing trade war with China.
“Those payments were tied to a planted acre, you had to plant something to get those payments,” Brown explains. “However, people that couldn’t plant also were facing challenges from depressed prices from the trade war, right? Crop insurance is based on the futures price in the month of February.”
Under the crop insurance program, producers making a prevented planting claim on certain policies automatically received an additional 10 or 15%.
- Producers received 10% extra on Yield Protection and Revenue Protection with Harvest Price Exclusion policies.
- Producers received 15% extra on Revenue Protection with Harvest Price Option policies.
The counties that received the most funding correspond with those that saw some of the most consistent rainfall this spring. Wood County led all counties in the state with 1,010 policies and more than $5.1 million in added funding.
In June, Gov. Mike DeWine convened a meeting at Kris Swartz’s farm in Perrysburg. Swartz joined farmers from Wood and neighboring counties describing a planting season lost to persistent rain.
“I think a lot of us have turned to, 'Let’s survive this year and let’s prep ourselves to have a really good 2020,'” Swartz says. “Do the things to our ground that’s going to put is in the position to really come out of the gate fast in 2020, and I think that’s the way we have to look at it because 2019 is lost to us.”
Brown explains the additional crop insurance payouts translate to about $30-40 per acre. That’s lower than most Ohio Market Facilitation payments, which are calculated on a per county, per acre basis. But Brown notes that’s because those farmers typically have higher production costs because they planted and harvested their fields.
With the trade war approaching its third year, these programs meant to act as a kind of backstop for the agricultural industry may be taking on a different cast—influencing producers’ decisions on the front end. Brown recalls the USDA’s announcement of a second year of Market Facilitation early this summer.
“I had a ton of phone calls all through the month of June of people asking me, 'Hey, how much are these payments going to be because it’s the deciding factor between planting and not planting,'” Brown says. “When you start hearing things like that, you start realizing these are coupled programs and it’s influencing market signals.”
Brown notes the federal government has been intervening in the agriculture sector since at least the 1930s, but he worries the most recent efforts operate more like a block grant than a safety net.
It means policymakers down the line could face a more difficult challenge when it comes time to wind down initiatives like the market facilitation program without also threatening the agricultural economy.