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Crop Insurance Series: Government Payments · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Professional Ag Marketing Podcast.
• 0:04
  SPEAKER_00: If you want a deep dive into the ag markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_00: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_00: This is your host, Mike Minor.
• 0:22
  SPEAKER_00: Let's get started.
• 0:24
  SPEAKER_01: Welcome everybody to the Professional Egg Marketing Podcast.
• 0:27
  SPEAKER_01: I am your guest host today, Lucas Peters, and I'm kicking off our 2025 Crop Insurance Decision Time series, where we're going to take five different topics and record a short podcast on each topic.
• 0:41
  SPEAKER_01: The topics this year we're going to cover changes and updates for the program for 2025.
• 0:47
  SPEAKER_01: We're going to take a podcast and look at ECO coverage in 25, the ARC PLC decision, some add-on private products for crop insurance in 25, and then review some of the government program payments that got announced at the end of the year that will be hitting the farm country here in 2025.
• 1:06
  SPEAKER_01: Thanks for joining us and let's get started.
• 1:09
  SPEAKER_01: A unique topic for uh 2025 is going to be government program payments uh and and kind of the timeline of those projected payments here over the the next few months.
• 1:23
  SPEAKER_01: And so a lot of this has to do with the programs that were passed and the spending bill at the end of 2024.
• 1:31
  SPEAKER_01: And we've heard a lot about them.
• 1:33
  SPEAKER_01: Uh, there still are not a lot of details out there, but when we kind of put everything together that potentially could get paid to farmers, um, some farmers are going to get up to four more payments for the 2024 crop and uh over the next uh few months.
• 1:50
  SPEAKER_01: So just kind of wanted to highlight some of the the programs, uh talk through them, give a little bit of a timeline, at least for what we know now, so we can start thinking about how that might affect our our bottom line.
• 2:02
  SPEAKER_01: And so the first one that we'll likely see, or most farmers will see, is the Economic Assistance Program.
• 2:10
  SPEAKER_01: This was the program announced at the end of the end of the year in the spending bill,$10 billion approved for the program.
• 2:17
  SPEAKER_01: And then each crop has a value calculated, uh, and it'll be the amount paid based on the acres planted in 2024.
• 2:28
  SPEAKER_01: So for corn, we're looking at a$43 an acre payment, soybeans a$30 an acre payment.
• 2:34
  SPEAKER_01: Uh just rough numbers that might not be exactly where it's at, but all of the projections have those figures pretty close to that number.
• 2:43
  SPEAKER_01: And the number is going to be the same for every farmer.
• 2:46
  SPEAKER_01: If you planted corn in uh Minnesota or Iowa or South Dakota, you're gonna get$43 an acre.
• 2:52
  SPEAKER_01: So there's no differences based on production uh or location.
• 2:57
  SPEAKER_01: And the uh the timeline on these payments, this will be the first payment you will likely get.
• 3:03
  SPEAKER_01: They passed the bill and they had 90 days to pay, so they have to be issued by like March 21st of 2025.
• 3:12
  SPEAKER_01: I would expect payments to start coming out end of February, early March.
• 3:16
  SPEAKER_01: Sign up process should be pretty simple.
• 3:19
  SPEAKER_01: I would expect a letter from FSA saying, hey, here are the acres you certified in 24.
• 3:25
  SPEAKER_01: Do you agree with that?
• 3:26
  SPEAKER_01: You sign off on yes, I agree, or or maybe there's an appeal process if something is wrong, and then uh they will issue payment uh based off of those numbers.
• 3:36
  SPEAKER_01: So good program, uh a little shot of revenue going into uh grain producers' um pockets and should be kind of the first one here in in early 2025.
• 3:47
  SPEAKER_01: Another program that got passed uh in that spending bill, they approved a little over$20 billion for a disaster program for 23-24.
• 3:56
  SPEAKER_01: Um, you know, they've had a disaster program here for the last number of years.
• 4:02
  SPEAKER_01: The the uh last uh last disaster program, the acronym was ERP, uh, if you remember those programs, and there was a phase one and a phase two.
• 4:12
  SPEAKER_01: So it's very uh still up in the air on how this program be rolled out or the uh how it will uh um uh issue payments or the calculation will be based.
• 4:24
  SPEAKER_01: But some of the information that I'm getting or receiving um is that they expect this year's program to be similar to the WIP uh WIP Plus programs from I think 2020-2021 disaster.
• 4:39
  SPEAKER_01: And so that's not official, that's just a few things we've been hearing.
• 4:43
  SPEAKER_01: Which, if it is similar to that, um that is going to be uh a simpler program uh to sign up for and pay than ERP, especially ERP phase two was.
• 4:54
  SPEAKER_01: So a welcomed change there if that's in fact uh what does happen.
• 4:58
  SPEAKER_01: And that'll be based if it does follow that, it'll be based on the yields you certified for crop uh insurance purposes.
• 5:06
  SPEAKER_01: And so they'll pull in your yield data, should be a minimal sign-up effort again, and uh and kind of have a projected uh payment on where you would fall based on your production and of course the payment factors of the program.
• 5:20
  SPEAKER_01: Still many details to be released on that program, but based on history, uh it seems like disaster programs generally start paying out and sign up in June.
• 5:32
  SPEAKER_01: And so I would expect probably a similar timeline uh on this year's program.
• 5:37
  SPEAKER_01: So probably about the time you're certifying acres for this year's crop, uh, you'll get some information on filling out for the disaster program.
• 5:45
  SPEAKER_01: Uh another payment and that might be coming in that June time frame.
• 5:50
  SPEAKER_01: If you purchased SCO or ECO coverage last year and you are in a county where yields were average or below average, uh I would expect an ECO payment with the price drop we had on corn and beans and wheat, uh ECO with that 95% coverage level will probably trigger a payment if yields were flat to lower.
• 6:14
  SPEAKER_01: And so if you were in one of those areas like southern Minnesota, northern Iowa that uh really struggled with some wet weather this spring and yields were uh were down, I would expect that ECO to trigger, and that ECO payment comes the uh third week of June after the final county yields are uh are calculated.
• 6:35
  SPEAKER_01: Uh if you didn't buy that coverage last year, of course you aren't gonna see that payment coming, but if you did, uh that is the timeline for that.
• 6:42
  SPEAKER_01: Uh in some areas, and I'll especially call out South Dakota, there are some counties where the corn yields specifically were really high, um potentially record.
• 6:52
  SPEAKER_01: Uh I it looks like doing the calculation if those come true on the final county yields that you out yielded the price loss, and there will not be an ECO payment.
• 7:02
  SPEAKER_01: Uh, probably more likely uh on soybeans because we had a lot of areas with soybeans that were average to below average.
• 7:09
  SPEAKER_01: The last uh potential payment, at least that we know about now, is Arc County payments for 24.
• 7:15
  SPEAKER_01: I do not think there will be PLC payments.
• 7:18
  SPEAKER_01: Of course, we won't know that for certain until uh the final prices get set here in September for the marketing year average.
• 7:25
  SPEAKER_01: But with Arc County, uh the way prices are trending or projected, and the yields kind of if similar to that ECO story.
• 7:35
  SPEAKER_01: If your county yields were average to below average, you're gonna likely see an Art County payment.
• 7:41
  SPEAKER_01: Um, and I would expect more Art County soybean payments than corn payments as a general rule across the uh the corn belt uh this coming year.
• 7:50
  SPEAKER_01: Those payments aren't coming until uh I think October, those get issued, so we got some a while before we have to think about that payment.
• 7:58
  SPEAKER_01: Um, but those uh are some potential checks that could uh hit your bank account uh over the course of the year.
• 8:05
  SPEAKER_01: Um, and that's only of what we know about so far, of course, uh with this administration and and some of the things they're trying to accomplish and the history they have of, you know, last time Trump was in office with tariffs, they issued some MFP payments uh and and programs like that.
• 8:22
  SPEAKER_01: Uh so there's potential for uh for additional payments if they seem necessary.
• 8:29
  SPEAKER_01: But uh it's something to consider and remember as you go through the year on how these uh different type of payments uh may affect uh your operation.
• 8:38
  SPEAKER_01: If you have questions on those, please please reach out and we'd be happy to talk through them in your specific situation.
• 8:45
  SPEAKER_00: And thank you to all our listeners.
• 8:47
  SPEAKER_00: Please reach out to us at professional eggmarketing.com.
• 8:50
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 8:56
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 9:02
  SPEAKER_00: See you next time.