MFP (Market Facilitation Program) Payments<\/u><\/p>\n
USDA announced last July that it would act to assist farmers damaged by tariffs and reduced exports.\u00a0 In September, the Market Facilitation Program (MFP) was initiated and the signup began.\u00a0 MFP payments are received on actual 2018 production.\u00a0 The payment rates for crops commonly grown in Georgia are listed below:<\/p>\n
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Initially, the signup deadline was January 15, 2019 but due to the partial government shutdown that included Farm Service Agency (FSA) offices, the signup deadline was extended to February 14, 2019.\u00a0 The signup period has now ended.\u00a0 Before payments can be received, in addition to signing up for MFP, the 2018 production must be certified.\u00a0 The deadline for certifying production with FSA is May 1, 2019.<\/p>\n
A first\/initial payment was authorized on half of 2018 production.\u00a0 If the farm was signed up for MFP and 2018 production has already been certified, the first payment has likely already been received.\u00a0 A second payment\u2014at the same MFP rate on the other half of production, was announced on December 17, 2018.\u00a0 If the farm is already signed up and certified the production, the second payment has also been made or should be made shortly.<\/p>\n
Producers did not need to sign up again for the second payment.\u00a0 If the first payment has not been or was not received, one payment for the total amount will be received.\u00a0 Below is an example for how the payment is calculated. Assuming a farm produced 750,000 lbs or approximately 1,500 running (gin count) bales of upland cotton lint in 2018.<\/p>\n
Example First Payment:<\/strong><\/p>\n Total Certified Production = 750,000 lbs<\/p>\n MFP = 750,000\u00a0 x\u00a0 \u00bd\u00a0 x\u00a0 $0.06\u00a0 =\u00a0 $22,500<\/p>\n Example Second Payment:<\/strong><\/p>\n Total Certified Production = 750,000 lbs<\/p>\n MFP = 750,000\u00a0 x\u00a0 \u00bd\u00a0 x\u00a0 $0.06\u00a0 =\u00a0 $22,500<\/p>\n Example Total (All In One Payment):<\/strong><\/p>\n Total Certified Production = 750,000 lbs<\/p>\n MFP = 750,000\u00a0 x\u00a0 $0.06\u00a0 =\u00a0 $45,000<\/p>\n Unfortunately, MFP payments for cotton will be less than expected.\u00a0 This is due to crop loss caused by Hurricane Michael and excessive rains and delayed harvest during the entire harvest season that followed.\u00a0 Prior to Hurricane Michael, USDA projected the Georgia crop at 2.9 million bales or approximately 1.4 billion pounds.\u00a0 The MFP on that amount would have been approximately $83.5 million.\u00a0 The latest USDA projection for the Georgia crop is approximately 936 million pounds and MFP of $56.1 million\u2014a 33% reduction.<\/p>\n The limit on MFP payments is $125,000 per person or legal entity for corn, cotton, grain sorghum, soybeans, and wheat combined and applicants must have an AGI of less than $900,000.\u00a0 The limit on MFP is separate from the limit on ARC\/PLC.<\/p>\n Given the relative crop acreages in Georgia and the relatively small payment on corn, on average, the majority of a person or entity\u2019s MFP will be on cotton if the operation grows cotton.\u00a0 For example, to reach the $125,000 payment limit from cotton only, it would require about 2 million pounds (4,340 USDA 480-lb statistical bales or about 4,183 \u201crunning bales\u201d from the gin).\u00a0 At the state average yield of 693 pounds per acre, this would be equivalent to roughly 3,000 acres of cotton per person or legal entity at that yield.\u00a0 Had yield been higher as expected (and many producers have said they had a record crop prior to Michael), the limit would have reached the cap at much smaller production and would have been an issue for some producers.<\/p>\n 2018 Disaster Assistance<\/u><\/p>\n At the time of this is written, there is yet no 2018 disaster relief package but the outlook appears to be improving for having legislation soon.<\/p>\n After months of budget negotiations, disagreements, delays, continuing resolutions, and a partial government shutdown, both the House and Senate passed the final budget package for FY19 on February 14, 2019 and President Trump signed the legislation into law on February 15, 2019.<\/p>\n Unfortunately, although included in earlier budget bills that never fully passed through both House and Senate, 2018 disaster funding was omitted from the February 14 final FY19 legislation.\u00a0 This means that disaster funds will now come in the form of a separate (supplemental) appropriations bill.<\/p>\n Recently, a bi-partisan group of Senators spearheaded by Senator David Perdue (GA) introduced legislation to the Senate for $13.6 billion in relief efforts including $3 billion for crop-related losses during 2018 due to Hurricanes Michael and Florence and other natural disasters.<\/p>\n Details and the specific workings of the program are unknown and yet to be determined by USDA, should the legislation proceed forward and become law.\u00a0 From what is known, this Senate legislation seems to closely align with a similar House bill that passed back in January.\u00a0 Therefore, if the Senate bill passes, it should not be difficult and time-consuming to work out the differences in a conference bill.\u00a0 President Trump has indicated he will sign disaster legislation when it reaches his desk.\u00a0 It is hoped that the Senate bill can be considered and passed later this month.<\/p>\n It appears that this legislation for 2018 losses would provide relief through the Wildfires and Hurricanes Indemnity Program (WHIP) in a similar manner as for 2017 crop losses.\u00a0 In general, the WHIP payments formula is:<\/p>\n WHIP Payment = WHIP Expected Value \u2013 WHIP Harvest Value \u2013 Insurance Indemnities<\/p>\n The WHIP Expected Value is based on the crop insurance Actual Production History (APH) for the crop and the coverage level of crop insurance elected for the crop.\u00a0 A WHIP factor of 70% to 90% is proposed and would be applied to the APH\u2014the higher the insurance coverage level, the higher the WHIP factor.<\/p>\n The WHIP Harvest Value is based on the actual yield.\u00a0 Insurance Indemnities would be the amount(s) received on the crop.\u00a0 Efforts are on-going to have the premium paid deducted from this amount.<\/p>\n The idea or concept behind WHIP disaster assistance is to pay the producer something above what crop insurance elected on the farm would pay\u2014to provide an additional amount above what crop insurance is going to pay.\u00a0 This amount will vary depending on whether the crop was insured or not and, if so, at what coverage level.<\/p>\n Because many producers in Georgia were anticipating a record crop, especially for non-irrigated production, it is realized that because WHIP is based on the farms APH, that any payment received cannot fully compensate for the actual loss.\u00a0 Any amount of payment is helpful, however.<\/p>\n The following website illustrates an example of how WHIP worked for 2017 crop losses.\u00a0 The WHIP factors will have to be updated\/revised based on how similar legislation would compensate for 2018 losses.\u00a0 Nevertheless, the illustrated example is useful in understanding the concept.<\/p>\n![\"\"](\"https:\/\/site.extension.uga.edu\/aaecext\/files\/2019\/03\/2-300x102.png\")
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