Another Round of Direct Payments to Farmers are Likely in Wake of COVID-19 Pandemic as Farmer Sentiment Declines Steeply
Posted on 04/07/2020 at 03:46 PM by Emily Staudacher
Farmer sentiment plummeted in March as a result of the global COVID-19 pandemic. The 47 point drop from February to March was the sharpest one-month decline seen since the Ag Economy Barometer began tracking farmer sentiment in 2015. Farmers cited the impact of the coronavirus crisis on profitability for 2020 and farmland values as reasons for their concern. Low prices for corn and soybeans are also impacted by the glut of oil resulting from Saudi Arabia’s increased oil exports. These two black swan events have created a great deal of uncertainty in agriculture.
As a part of the Coronavirus Aid, Relief, and Economic Security Act (CARES), $23.5 billion was specifically earmarked for agricultural relief. The bill provided $14 billion to replenish the Commodity Credit Corporation’s account, which was used by the USDA to make trade mitigation payments for 2018 and 2019. The bill also designated an additional $9.5 billion specifically to provide support of agricultural producers impacted by the coronavirus. Although it is not clear what form the support will take, the American Farm Bureau Federation is urging direct payments to a wide range of producers. Senator Grassley has also stated that he expects another round of direct payments as a result of dropping commodity prices and the pandemic.
Given the turmoil in the ag industry it is extremely important to ensure that agricultural loans have been properly secured. There are special rules for securing crop insurance and direct farm program payments.
Read more here on why it is important to conduct file reviews and ensure best practices are being utilized to secure a lender’s collateral position in farm program payments and crop insurance proceeds.
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