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WRAPPING UP: As soon as you finish harvest, provide FSA your actual production total by crop across all farms to receive an MFP payment.

Applying for USDA’s new MFP program

Communicate with your local FSA office and crop insurance agent for answers to specific questions.

As most farmers wrap up harvest, they are headed to the local Farm Service Agency office to apply for the new Market Facilitation Program. The primary requirement is an actual production number for the producer’s share of each crop harvested in 2018. With cash flow running tight this fall, consider applying for the MFP payment as soon as you finish harvest and you have production evidence. The program requires self-certification by producers, subject to spot check.

“Keep a few things in mind and prepare before you visit the FSA office,” advises Steve Johnson, Iowa State University Extension farm management specialist. “FSA just needs an actual production number by crop, not your actual records. In addition, you’ll need to indicate the source of evidence for that production.”

Your crop insurance agent would like this same production evidence to determine a potential crop insurance loss and to report as your actual production history by farm for 2018. The agent needs to report your APH by farm to USDA’s Risk Management Agency, which oversees the federal crop insurance program.

Johnson reminds farmers: “This same production evidence you are providing to FSA, you’ll also need to provide to your crop insurance agent, but keep the production separate by farm.”  

Type of records needed
Consider using “soft records” for MFP since it requires producer self-certification.  Johnson encourages farmers, “Don’t make this difficult. The FSA doesn’t require you to come into their office with production verified by a third party.” Thus, you don’t have to use what is often called “hard records.”

However, FSA will want net production, not gross production. “This simply means they want production adjusted for dry weight bushels,” Johnson says. “So, adjust the bushels to a maximum of 13% moisture soybeans and 15% moisture corn, just as you do for crop insurance purposes.”

Remember, MFP is a self-certification program, subject to spot check. Farmers can use their yield monitor data or scales on grain carts, but those devices could require that you prove accurate calculations. Farmers can measure their own grain bins, and not have a third-party verification.

“No one knows if or when an FSA spot check takes place on your particular farm,” Johnson says. “But you should use the same production records for the MFP program that you initially use for crop insurance purposes. Both programs are subject to spot checks by USDA agencies.”

Harvest prices released for insurance
USDA’s Risk Management Agency recently released the 2018 harvest prices for crop insurance revenue products. The corn harvest price is $3.68 per bushel, and soybean harvest price is $8.60 per bushel, respectively.

These harvest prices are important because once the crop insurance agent verifies your production evidence by farm, a potential crop insurance loss can be estimated. “We expect to see some claims this year, especially on soybeans,” Johnson says.

The spring-projected prices used to determine the revenue guarantee on your crops were $3.96 per bushel corn and $10.16 per bushel for soybeans.

For revenue protection crop insurance, these prices are multiplied times your APH times the level of coverage you elected. With harvest complete, actual production is multiplied times the harvest price and subtracted from your revenue guarantee. This determines the potential revenue loss per insured acre.

“That’s over a 15% drop from the spring-projected price to the harvest price for soybeans,” Johnson says.

If your average 2018 yields were only your APH yield for each crop and you elected an 85% coverage level, you are at that threshold for an indemnity claim. Many farmers had some bean yield losses due to wet harvest conditions. However, your crop insurance agent doesn’t know if there’s a loss until you turn in your production evidence to them.

If a crop insurance loss is likely, that’s when your agent will need “hard records” verified by a third party. This means accumulating scale tickets, warehouse receipts and settlement sheets, and getting an adjuster out to measure your grain bins.

What about soybean quality?
Some soybean fields were damaged by heavy rains this fall. Beans developed mold in the pods while waiting to be harvested. Low-quality and moldy beans, depending on the amount of damage, may qualify for a quality damage payment from your federal crop insurance coverage. You should have notified your crop insurance agent within 72 hours of this known loss. Work with your agent regarding quality concerns.

Keep in mind the discounts for lower-quality soybeans that elevators and processors charged farmers this fall aren’t just a moisture adjustment. When your soybeans are discounted, it doesn’t necessarily mean a reduction in net production. Most quality discounts are reduced in the price per bushel — dollars and cents.

“I wouldn’t be worried about using a settlement sheet or warehouse receipt for my proof of production for either the MFP or for crop insurance purposes,” Johnson says. “But the soybeans are going to reflect net production, adjusted for moisture content.”

So initially, use your “soft records” for the MFP. “You need to do a good job of keeping records at harvest and use those records for both the MFP and for the initially determined potential crop insurance losses,” Johnson says.

Keep in mind you are going into the FSA office with one actual production number by crop across all farms, producer’s share. Provide this number on the new FSA form CCC-910 and indicate your source of production evidence. Then sign and date this form, and you should receive a direct deposit into your checking account in about seven to 10 days.

“That first MFP payment you’ll receive on soybeans is going to be roughly $33 per acre on 40-bushel-per-acre soybeans, and nearly $50 per acre on a 60-bushel-per-acre bean yield,” he explains. “It will be your production, times 50% times the $1.65 payment rate for the MFP. Most of the MFP payments are going to be on soybeans, and that cash flow will be very timely in the next few weeks. If you have questions, communicate with your local FSA office or your crop insurance agent.”

TAGS: Regulatory
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