After months of uncertainty and murky details, USDA announced payments for the 2019 Market Facilitation Program (MFP) in late July. The per-acre payments will vary by county and range from $15 to $150.
Just how did USDA calculate the MFP payments in 2019? Put simply, the agency estimated the total damages for the crops grown in a county, then divided the total damages by the average acres planted in that county to come up with the payment rate.
Smart Uses for the Money
While the payments are a blanket rate by county, there’s no blanket suggestion on what farmers should do with those funds. First, it’s critical to analyze your financial position without the cash injection.
“Before finalizing any decision, have a good understanding of your farm’s current liquidity position,” advises Alan Hoskins, president of American Farm Mortgage. “Given the market and weather challenges, make sure you have a solid estimate of this year’s financials.”
Consider breaking down the payments to a per-bushel basis, suggests Chris Barron, a financial consultant with Ag View Solutions. Then you’ll have a clear picture of what the money means to your operation. For example, a $60-per-acre payment on 200 bu. per acre corn is a 30¢-per-bushel increase in revenue.
Do you have an adequate cash reserve? Now is a smart time to keep as much cash on hand as you can afford to do, Barron says.
“A lot of operations are going to need to plow the money right back into working capital,” Barron says. “Unless you’re flush on cash, this is an opportunity to maintain cash flow, at least at a level that will keep you from going backward too far.”
Sign-up for the program at your local FSA office through Dec 6, 2019. To see your county payment rate, visit AgWeb.com/2019-MFP-rates