The final days of 2024 brought great news and some certainty for our cash-strapped farmers from our nation’s capital. Disaster and economic losses were included in the continuing resolution that was passed by Congress and signed into law on December 21st by President Biden. H.R. 10545 (the American Relief Act) extended federal spending and averted a government shutdown through March 14, 2025. It also provided farmers additional certainty by extending the provisions of the 2018 Farm Bill through September 30, 2025. The bipartisan CR passed the U.S. House and Senate by votes of 366-34 and 85-11 respectively. With all of this said, we had hoped and expected Congress would act to provide assistance to agricultural producers, and they delivered. Well done and thank you!
The “now what?” is…how will the assistance be implemented? Since the bill passed, lenders from across the U.S. have been emailing and calling asking how much of the projected economic assistance payments should they realistically be including in producer loan packages. Of the $30.78 billion authorized by the supplemental, $10 billion is set aside for economic assistance with the rest targeted toward physical disaster losses. Congress provided detailed instructions on how the economic assistance should be distributed by USDA. The final bill was largely the same as we described in a previous Southern Ag Today article. As indicated in the footnote below the individual commodity payment rates in the previous article, “Commodities estimated to receive minimum payment, either through formula with complete data or based on assumption due to lack of publicly available data, final payment rates may vary”.
This means that you and your banker probably shouldn’t include the listed payment rates multiplied by your crop acres in your loan as economic disaster loss payments. There is a finite amount of money to be shared among producers of the 21 covered crops, and if USDA’s estimates on the minor crops end up being significantly different, even though the acreages are not large it could lead to somewhat lower payment rates across the board.
In our opinion, based on years of watching programs get implemented by USDA, we would suggest that 85 percent of those rates should be the lowest amount lenders should use. We can’t imagine payment rates being adjusted more than that. Further, the act called for the economic aid to be distributed no later than 90 days following enactment (or March 21, 2024), so the payment rates should be known before many (though certainly not all) producers start planting.
Outlaw, Joe, and Bart L. Fischer. “Good News for U.S. Producers… Now What?” Southern Ag Today 5(1.4). January 2, 2025. Permalink
