Losing MFP May Hurt Farm Income in 2020
January 23, 2020
Overall, net farm income, was forecast by USDA's Economic Research Service (ERS) to increase 10% to $92.5 billion in 2019.
However, a portion of that income, $22.4 billion, came from direct government farm payments including the trade related Market Facilitation Program.
Up to $14.5 billion was authorized to be paid to farmers in 2019 and according to the latest numbers nearly $11 billion of that has gone out. USDA Secretary Sonny Perdue says he expects a third and final round of the 2019 MFP to be paid in the coming months, but nothing new for 2020.
It was the second year for MFP and while it has helped to stem the fallout from President Trump's trade negotiations, market advisors like Tommy Grisafi of Advanced Trading say going without is likely to be an adjustment.
"I think next year could be a very challenging year financially if prices just stay mediocre," said Grisafi during an interview for AgDay TV with Clinton Griffiths. "If the MFP payments are gone it could be really tight for people who are already on that cusp of hurting financially."
Grisafi says if farmers plant 93 to 94 million acres of corn or if markets don't recover it is not unlikely we'll hear calls for more aid.
"I believe that the American farmer, the greatest advice we can give them right now is to get used to marketing grain with big bushels and low prices," says Grisafi. "It's unfortunate that they're going to the mailbox and that's making the difference on whether they're losing a little money or breaking even."
That said, he knows there are pockets of the country where farmers faired okay in 2019.
"We even have some clients who did exceptionally well this year," said Grisafi. "They're not bragging about it, but if you had the bushels, the basis and the MFP, you should have had a good year."