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Sonny Perdue: ‘We've got too much supply’

The U.S. Agriculture secretary tells farmers not to count on Market Facilitation Program payments in 2020.

Mindy Ward

February 28, 2020

3 Min Read
corn grain in trailer
TOO MUCH GRAIN? Farmers may need to adjust their crop plans as U.S. Secretary of Agriculture Sonny Perdue says lower prices are about supply, not about trade disruption.BanksPhotos/Getty Images

Don’t include a Market Facilitation Program payment in your 2020 farm management plan. That was the message from U.S. Secretary of Agriculture Sonny Perdue to a packed room of farmers and ranchers during this year’s Commodity Classic.

“I don't believe the Market Facilitation Program was created or instituted as a price support program,” Perdue said. “We have safety nets in the form of crop insurance and other things to deal with pricing in that area, and deal with reference prices in that way.”

He admitted the MFP payments helped farmers. “It literally changed the color of some bottom lines,” Perdue said.

Last year, farmers were faced with weather disasters accounting for nearly 20 million in prevented plant acres. And then there were the added trade disruptions that caused many farmers not to be able to market their crops. Much of the grain was held on the farm or in county elevators.

Payments made

The third round of 2019 MFP payments was set to go out at the beginning of February. These payments assist farmers suffering from damage because of trade retaliation by foreign nations. It is based on a single county payment rate multiplied by a farm's total planting of MFP-eligible crops in 2019.

In the end, Perdue said small farmers saw payments on average of $55 per acre, while larger enterprises realized $47.

“We think generally [MFP payments] have been very much accepted and appreciated,” he said. However, it is not a marketing plan for farmers in the future. Rather, farmers may go back to Economics 101 and the basic law of supply and demand. Right now, Perdue contends, there is too much supply.

USDA Sec. Sonny Perdue speaking to reporters during this year’s Commodity Classic
MANAGING FOR 2020: U.S. Secretary of Agriculture Sonny Perdue spoke to reporters during this year’s Commodity Classic and said that farmers need to start looking at supply and demand when making planting decisions for their farm.

Focus on supply

“When trade is not disrupted or tariffs are not affecting trade, if we see exports flow and markets do not rise in respect to that demand, what does that indicate?” Perdue asked. “Pricing is a function of supply and demand. If demand increases and the price doesn't, that still means that we've got too much supply.”

When farmers make planting decisions on corn and soybeans or other crops, they need to look at supply. Perdue said if the U.S. goes back to export levels seen in the past and prices don't rise, “We need to look at the level of productivity, individually and corporately, in order to adjust that.”

Return to 'normal'?

However, some farmers are waiting for prices to return to agriculture’s golden years of 2009 to 2014. That is the era farmers today tend to use to determine what “profitability in agriculture” looks like, Perdue said. “That is what we like to think is normal,” he said. “I’ve been in agriculture a long time. It wasn’t normal to me. Those were career-high years.”

Perdue said he would love for agriculture to return to those days, but noted it is not here yet. Still, his department is predicting above-average income for farmers given the 30-year average.

“I’m not trying to sugarcoat the fact that farming is not in a gloriously overly profitable period right now,” he added. “But farmers will do what they’ve always done, do the best with what they've got out there, and what they're given from the market perspective.”

However, he noted that if another trade disruption does take place, President Donald Trump stands by farmers and will not let them suffer and be disrupted by any other force. “He will do that,” Perdue added. “He’s got your back.”

About the Author(s)

Mindy Ward

Editor, Missouri Ruralist

Mindy resides on a small farm just outside of Holstein, Mo, about 80 miles southwest of St. Louis.

After graduating from the University of Missouri-Columbia with a bachelor’s degree in agricultural journalism, she worked briefly at a public relations firm in Kansas City. Her husband’s career led the couple north to Minnesota.

There, she reported on large-scale production of corn, soybeans, sugar beets, and dairy, as well as, biofuels for The Land. After 10 years, the couple returned to Missouri and she began covering agriculture in the Show-Me State.

“In all my 15 years of writing about agriculture, I have found some of the most progressive thinkers are farmers,” she says. “They are constantly searching for ways to do more with less, improve their land and leave their legacy to the next generation.”

Mindy and her husband, Stacy, together with their daughters, Elisa and Cassidy, operate Showtime Farms in southern Warren County. The family spends a great deal of time caring for and showing Dorset, Oxford and crossbred sheep.

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