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1. Nice article based on first-hand observations in the eastern Corn Belt. @kannbwx may be right that more corn was planted after June 1 in the eastern Corn Belt than we thought. Just the right jumping off point for me to editorialize about my views on these decisions.
@kannbwx 2. Start with my personal opinion. Everyone says they want to know what I think, so here goes. This is opinion not analysis today. I think lots of people planting corn after June 1 are going to regret doing so.
@kannbwx 3. The main reason I think people are going to regret June planted corn is when they start to realize the total $$ that is going to be collected on prevent plant (PP) acres. What follows is my sense of the $ based on various sources and my own opinion.
@kannbwx 4. To start, there is of course the PP payment itself. In IL that is most likely in the range of $350-$400/ac. I think we should now be thinking about a "menu" of additional payments on those acres.
@kannbwx 5. This is only my opinion, but I think the USDA is going to allow MFP2 payments on PP acres that plant a cover crop that is on the list of program crops for a county. Remember that to be eligible for MFP2 payment you just have to plant something.
@kannbwx 6. USDA lawyers say that a trade mitigation payment can only be made if you plant something and therefore incur a trade damage in 2019. I think that something will be the cover crop on PP that is on the list of eligible cover crops in the county. After all, it did get planted.
@kannbwx 7. So, the first item on the menu of additional payments for PP acres is the MFP2 payment. I am going to use an expectation of an average of $50/ac. in IL. And I know that it will come three payments and it could theoretically get cancelled. What are the odds of that??
@kannbwx 8. Second up on the menu of additional payments is the use of PP acres for haying, grazing, and chopping after Sep 1. This is a known fact now. What is harder to asses is how much this is worth per acre.
@kannbwx 9. The early haying/grazing/chopping date is obviously most useful in areas with heavy dairy and cattle production. That is a decent chunk of the Corn Belt. For much of IL, probably not that big of a deal. But I have faith in the creativity of IL farmers to find some value.
@kannbwx 10. For example, why not sow oats on IL PP acres, which could be used to bale straw at least? Obviously cannot do than on a huge scale. Just saying that if there are opportunities farmers tend to figure them out.
@kannbwx 11. The third item on the menu of additional PP payments is through the disaster bill. Until this week I thought PP acres would get a payment through MFP2 itself OR the recently passed disaster bill. Now I think PP may be able to collect on BOTH. Seriously.
@kannbwx 12. Yes, that's what I said. Both. So, USDA said in last press release that the payment in disaster counties might be "minimal." I don't know what that means but I am going to take a wild guess and say $20/ac for PP in disaster counties.
@kannbwx 13. The fourth item on the additional PP $$ menu is through the possibility of EQUIP conservation payments for cover crop acres. Thanks to our @RHORI_Krista for alerting me to this possibility. I don't have any idea about the size of these payments.
@kannbwx @RHORI_Krista 14. So, you put it all together and here in IL an acre of PP corn ground may be able to collect: PP payment + MFP2 payment + haying/grazing/chopping income + disaster payment + EQUIP payment. I realize that eligibility restrictions could yet be put in place.
@kannbwx @RHORI_Krista 15. What could all this add up to in the end? Let's see. $350-400 PP payment + $50 MFP2 payment + $20 disaster payment + ?? haying/grazing/chopping income + ?? EQUIP payment = $420 - $470 total for PP and up in IL.
@kannbwx @RHORI_Krista 16. I am confident that we are going to be hearing stories of more than a few farmers in IL who grossed $500+ on their PP corn acres when you add all of the items on the additional payment menu I discussed earlier.
@kannbwx @RHORI_Krista 17. Lastly, I want to re-emphasize that there is a lot of opinion and my own judgement in reaching that conclusion. Others can quite reasonably come to different conclusions given the very fuzzy announcements coming out of the USDA on several of the items on the additional menu
@kannbwx @RHORI_Krista 18. Just so ya know, the driving assumption behind my opinions is that one cannot over-estimate the willingness of Congress and the Prez to send $$ to ag during major weather disasters. This is further leveraged by the fact that 2020 is an election year.
@kannbwx @RHORI_Krista 19. I'm done. Have a wonderful weekend!
