We're in a land of confusion just off a highway paved with good intentions.
That more or less sums up what is going on with the prevented-planting language in the new agricultural disaster legislation approved by Congress at a time when spring planting season could be looking at record-breaking unplanted acreage.
The backbone of the disaster funds, about $3 billion in total, builds on USDA's 2017 Wildfires and Hurricanes Indemnity Program (WHIP). That was a disaster program funded by the Bipartisan Budget Act of 2018. When creating the 2019 disaster package, language was added concerning "losses of crops (including milk, on-farm stored commodities, crops prevented from planting in 2019, and harvested unadulterated wine grapes.)"
I got a lot of emails and calls today asking for more details about the prevent-planting language in the bill and who would be impacted. Mentioning the provision in articles on Monday and Tuesday, as I did, probably added to questions for farmers who continue to try to plant crops. I wasn't the only one getting calls from farmers.
"Folks are calling us from Ohio to Iowa to the Dakotas all through that whole delayed planting area and they are confused," said John Newton, an economist with the American Farm Bureau Federation. "When we started working on this, there was no idea there would be this kind of historic delays in planting. Now the package has been modified to cover that, there's a lot of confusion."
Newton had some analysis on the disaster provisions as well. https://is.gd/…
That specific language on "crops prevented from planting" was not in the original disaster bill, but was added this spring as congressional appropriators worked on crafting the language and senators amended the bill several times. The bill also specifies raises in coverage levels for crop insurance protections from the past disaster bill to 90% for those who bought insurance policies and 70% for those who had non-insured crops. (Those percentages were raised from 85% and 65% in the earlier bill.
USDA created WHIP following some loose instructions from Congress in the Bipartisan Budget Act. https://www.fsa.usda.gov/…
This time around, there were competing disaster bills in the House and Senate with various lawmakers adding language as new disasters mounted, such as the Midwest floods. As one congressional insider told me, a Midwest senator added the language on "crops prevented from planting in 2019" and changed the percentage of insurance loss protection levels that could be covered.
The 2018 budget act gave USDA money for 2017 disasters. It was completely after the fact.
This time around, Congress passed a disaster bill providing language on 2019 prevented-planting protection levels right smack dab in the middle of late planting season for insurance protection. Congress opened up that vague language on crop-insurance protection levels for prevent-planting during the worst planting season in recent memory.
Based just on USDA's Prospective Planting estimates and the June 3 Crop Progress report, farmers moved into the late planting season this week for corn with roughly 30 million acres still unplanted (34%). For soybeans, several states are not in the late-planting season quite yet, but will be within the next ten days. There are still nearly 52 million acres unplanted soybean acres (61%).
In 2017, USDA reported a final total of 2.5 million acres of prevented-planting acres for all crops. Some agricultural economists estimate this year could hit 20 million acres.
Also the 2017 WHIP only covered producers in counties that had presidential emergency disaster declarations or secretarial disaster designations. So not everybody was eligible. The WHIP payments were based on a formula that extracted insurance indemnities.
A significant percentage of prevented-planting acres will likely come out of counties and states that are not under any federal disaster declaration. Again, the difference between then and now is the sheer volume of potential unplanted acres that could be covered -- and how that changes the equation.
USDA will have to figure out how to divvy up $3 billion in disaster funds that includes Hurricanes Michael and Florence, as well as crops from California wildfires and the Midwest flooding. The math just doesn’t add up for a prevent-planting windfall for everybody everywhere.
USDA did not respond to questions about the prevented-planting provisions in the disaster bill on Wednesday. That's likely because the disaster bill has not been signed into law yet by President Donald Trump. D.C. policywonks, however, have been calling on USDA to come out and clarify the issues because of the sensitive timing right now in this late-planting year.
Ideally, more clarity will be coming sooner rather than later.
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
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