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Will trade aid affect planting decisions?

Photo courtesy of Scott Bauer, with the U.S. Department of Agriculture

An agricultural economist from the University of Illinois says the next round of trade aid coming out of Washington, D.C. could impact planting in 2019.

Politico says if the U.S. Department of Agriculture (USDA) should happen to model this aid package after the $12 billion it rolled out last year, it would dramatically skew incentives for Midwest farmers to plant soybeans this spring. Scott Irwin, of the University of Illinois, says there are two reasons for this.

The Market Facilitation Program’s (MFP) payment rate for soybeans came in at $1.65 a bushel, the highest of any commodity. That compared to a payment of one cent per bushel for corn. Payments were tied to actual production in 2018.

Irwin says, “My guess is USDA will try to not tie payments to actual production, in order to not affect farmers’ planting decisions.” He notes that lawmakers have tried for decades to make farm policy more market-oriented. He says this round could be modeled after the old direct payment system that was in effect before the 2014 Farm Bill.

Many Midwestern producers actually still have time to change their plans because of the historically wet spring around the region.

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