Ep. 32 Projected Economic Assistance for Arkansas Crops Under the American Relief Act

00;00;22;04 – 00;00;57;24
Dr. Hunter Biram
Yeah, spent the last few days in DC, barring some, work with, the extension risk management education leaders, so, yeah, we, have a program, through USDA, NFA, the National Institute on Agriculture and, that’s on the program, all extension risk management education. (ERME) for short. And, yeah, we have regional center. So at the southern center headed up by Ron Rainy and we’ve got, you know, North Central Center House, Nebraska, Western Center House to work in Washington state and the Northeast Center housed in Delaware.

00;00;57;24 – 00;01;12;05
Dr. Hunter Biram
And we have a digital center housed in Minnesota. And so all these directors come together and we, talked about and inquired about how we can improve our program, know, so you’ll had a lot of fun me meeting with those folks.

00;01;12;07 – 00;01;15;19
Riley Smith
Well, you want to tell the listeners what we’re going to be discussing today?

00;01;15;24 – 00;01;35;06
Dr. Hunter Biram
Yeah. So we’re going to talk a little bit of policy today. We’re going to talk about the, the American Relief Act of 2025. So that pretty much is just the continuing resolution that funded the government through, March 14th and more specifically, we’re going to talk about the economic assistance that was in there for Arkansas producers.

00;01;35;08 – 00;01;55;15
Dr. Hunter Biram
There was a $10 billion authorized in that language for economic losses. There was also about $20 billion for, weather related disaster assistance. But we want to talk about that today. We’re still focused only on the assistance, for farmers, for economic losses. And what I mean by that is going to be, when the revenue didn’t meet the costs, right?

00;01;55;15 – 00;02;04;10
Dr. Hunter Biram
When they didn’t have enough revenue to cover costs. And you never know if revenues or your pay your rent or buy. And so that’s the long and the short of today’s episode.

00;02;04;12 – 00;02;28;29
Riley Smith
So besides that, can you give us a little bit of, like a little background into the economic assistance and what motivated it? Because I know we talked about, you had a special episode at the end of last year, talking about after they did the, extension on the 18 farm bill and we had a, economic assistance on that for I guess that was the US as a whole.

00;02;29;01 – 00;02;33;11
Riley Smith
Not necessarily Arkansas, but can you, can you do that for us?

00;02;33;13 – 00;03;05;23
Dr. Hunter Biram
Right. So, yeah. So I had that special edition back in December, talking about the continuing resolution, and eventually it was passed and, it so the continuing resolution extended the 2018 farm bill for the 25 year and, authorized, like I said, $10 billion in economic assistance. And that’s across the US. But in Arkansas specifically, those $286 million looks like that’s been that will that we’re projecting to be, for farmers to receive across the state.

00;03;05;23 – 00;03;38;27
Dr. Hunter Biram
So what motivated all that money to begin with? And I mean, low price, I mean, low prices and high input costs doesn’t that’s that’s the short version. And, I think that’s really all people know. It was, you know, we had lower crop prices. And crop prices are looking at the third year consecutive to decline in terms of marketing or average prices, which means crop receipts or major cash crops like your corn, soybeans, rice, cotton, seeing those looking at their third straight year of decline, with costs that yes, they’ve come down some since the Ukrainian invasion.

00;03;38;29 – 00;04;07;00
Dr. Hunter Biram
But they have not as necessarily gotten back to the pre Ukraine invasion levels, but they’re still somewhat elevated. So you can’t have you somewhat eliminate fertilizer prices. And having decline was much lower. These steep declines of crop receipt. That equates to economic losses or like I said, revenue not being able to cut costs. And that’s concerned farmer concerned lenders because they’re worried about is a farmer is going to be able to pay their loans and be able to actually farm next year.

00;04;07;02 – 00;04;21;16
Dr. Hunter Biram
And so that’s, you know, so the lenders were involved in all all people in that industry. But, you know, we really even worried about like lenders and helping them to, continue to help provide loans to farmers so that they can farm. In 2010. Sound.

00;04;21;19 – 00;04;36;21
Riley Smith
And I know we’ll cover this in the market report, but I’ve noticed, in the last week that fertilizer prices have took a pretty, pretty big jump. And it looks like they’re going to they’re going to steadily incline that.

00;04;36;24 – 00;04;49;05
Dr. Hunter Biram
Yeah. Exactly. That’s seasonality. I mean, this is just the time of the year when folks are starting to buy fertilizer. And so you’re seeing that seasonal demand drive those prices higher. And so let’s, you know, let’s just where we are at this time of the growing.

00;04;49;05 – 00;05;09;26
Riley Smith
Season, it’s that middle ground. A lot of people, you know, a lot of producers probably bid out their fertilizer, but if they look like were going to be short or some of them didn’t bid and, or bid all of it, then we’re in that time frame where everything’s starting to get bought. Bought up. Another another question.

00;05;09;28 – 00;05;26;08
Riley Smith
You were talking about the, you know, what Arkansas is to receive the have you looked or has seen anything on the you know, I don’t know if this is a, hot potato, but GOP in a.

00;05;26;10 – 00;05;26;25
Dr. Hunter Biram

00;05;26;26 – 00;05;34;14
Riley Smith
Agricultural cut the 230 billion. You know what I’m talking about?

00;05;34;16 – 00;06;03;19
Dr. Hunter Biram
Yeah, yeah. I mean, in terms of getting a continuing resolution, or getting the government funded be on that March 14th deadline. Yeah. I mean, I think the big takeaways for the moment are, is that the House is trying to put together one big, beautiful bill, to quote, President Trump. And the House is, try to get that put together to get that budget authorized for the year.

00;06;03;21 – 00;06;31;12
Dr. Hunter Biram
Whereas the Senate, you know, they’re trying to put together, they’re, they’re focusing on, tax, immigration and, and, sorry, immigration and energy first and foremost. And I think the House they, they want to be the one Steve types immigration and John one and like, you know, there are some potential cuts, in terms of the in terms of, snap assistance, but we’ll, we can we can talk about that on, on another app so we can revisit that.

00;06;31;15 – 00;06;43;08
Riley Smith
Right. Moving forward, with the American Relief Act. So how is the payment rate calculated? Like so what do the rates look like for Arkansas crops?

00;06;43;10 – 00;07;07;22
Dr. Hunter Biram
Yeah. So there are economic losses that account like by crop. This is going to be a national number okay. So we’re using the national price and national yield for each crop. So there’s nothing specific to like any county in Arkansas, in county in Kansas, any. Mississippi. It’s you know, this is a national payment, right? So every crops in a place the same.

00;07;07;22 – 00;07;32;02
Dr. Hunter Biram
rate in every county, in every state, that’s important. And so an economic loss is determined based on the marketing year average price from the USDA WASDE report this the projected marketing average price of 2024, 24/25 crop years at 24/25 marketing year. There is also a national average, harvesting yield that’s used that’s coming from Nass.

00;07;32;02 – 00;07;54;03
Dr. Hunter Biram
So that’s a ten year average yield. And that’ll give you your gross return. So gross revenue price time Geo. So those two values and the gross revenue. And then there’s an expected cost production which the economic research Service reports. That’s that’s where the, cost production comes, comes from. And so all these are in per acre values.

00;07;54;06 – 00;08;22;11
Dr. Hunter Biram
An economic loss is calculated and the loss is recorded. If the cost of production is greater than the return, that makes sense. So when the revenue can’t cover the cost, there’s an economic loss that is determined by this private rate. Now there’s the economic loss dollars per acre. That number will be multiplied by 26%. There’s nothing really magical about that percentage other than that’s what that’s what the budget would allow.

00;08;22;11 – 00;08;50;25
Dr. Hunter Biram
So 26% was used in 26% I was a per acre economic loss. And then you get your, economic assistance rate or your payment rate and their mechanism. There’s also another mechanism which is going to be what they call, I guess this will be more of the minimum price guarantee using the PLC price loss coverage reference price of National PLC yield and then 8% rate on that.

00;08;50;28 – 00;09;10;10
Dr. Hunter Biram
Those are the two different ways a payment can be determined. Now the actual payment rate is the higher those two. So to the higher that more or less the PLC I that I’ve just said or the economic assistance. Right. So you’re going to get the higher of those two values. And so I’ll rattle off a few of those that are be relevant listeners now.

00;09;10;10 – 00;09;41;08
Dr. Hunter Biram
So for corn you know, we’re looking at, about $43 per acre for cotton. We’re looking at about $87 an acre, for peanuts, looking at about $76 an acre rice looking at close to 70, $71 per acre, sorghum, about $43 an acre. Soybeans close to $30 an acre. Wheat about 31, dollars an acre. So those are those payment rates that have been determined based on this calculation.

00;09;41;10 – 00;09;42;06
Dr. Hunter Biram

00;09;42;08 – 00;09;47;01
Riley Smith
So how much are Arkansas farmers estimated to receive?

00;09;47;04 – 00;10;10;15
Dr. Hunter Biram
Yeah. So, the Arkansas Arkansas farmers are it’s interesting, about $286.2 million altogether in state of Arkansas. And then this is this is a projection ultimately depends on USDA and or implementation will work that Arkansas would receive by 26 million. Of that $10 million. Okay.

00;10;10;17 – 00;10;19;02
Riley Smith
In my follow up question, how will this look like? Practically. So how will a farmer actually receive the assistance?

00;10;19;04 – 00;10;36;16
Dr. Hunter Biram
Yeah. And so what when it goes back to USDA authorization. And so, you know, what will likely happen is there will be a pre-filled form from FSA, that a farmer will adjusting the sun also. And, and, once they sign off on it, they’ll be able to get there. They’ll, they’ll be able to get their money.

00;10;36;16 – 00;10;58;18
Dr. Hunter Biram
And, what I, I’ve been reading, you know, it sounds to me like the new secretary, Brooke Rawlins, is very serious about getting this money out on time. And so if that were the case, we should expect money by March 20th. I mean, she seems very serious about this. And at the end of the day, she’s the head of USDA, and USDA is in charge of implementation.

00;10;58;18 – 00;11;15;25
Dr. Hunter Biram
The law’s been passed. Now it’s over to the administration. And so they have to be the ones to implement the payments. So, in a flurry of lots of changes happening in the federal government right now, that seems to be one thing that, you know, that I’m very confident it’s not going to get cut. I mean, that money is authorized.

00;11;15;25 – 00;11;39;02
Dr. Hunter Biram
I think it’s going to be there. And Brooke Rawlins wants to make sure that it’s gotten out on time. So I think there’ll be a prefilled out form. I think folks probably get their money by March the 20th of this year. They can use that to pay off 24 loans. They can use it towards returns in 2025, whatever works best for their operation and, whatever could help them to secure a loan and help them to get through, this crop year.

00;11;39;02 – 00;11;42;23
Dr. Hunter Biram
I think the best way to approach using that money.

00;11;42;25 – 00;11;48;02
Riley Smith
Well, it sounds like Arkansas producers are in, in a pretty good boat for that matter.

00;11;48;05 – 00;12;00;07
Dr. Hunter Biram
It’ll help. I’ll, you know, I will say I think it’ll help with loan renewal. But I don’t think it’s necessarily going to be the fix that we need. I do think getting that in the form safety net, getting any farm bill across the finish line this year going forward.

00;12;00;12 – 00;12;03;12
Riley Smith
Dr. Biram you ain’t calling it a Band-Aid are you?

00;12;03;14 – 00;12;31;22
Dr. Hunter Biram
Yeah, I am, but, really I think it’s a relatively weak Band-Aid. But I do think I think, I mean, I do think it’s helped. And farmers would say that, and, you know, the lenders would say that, but I don’t think it’s the it’s not the long term solution. When you look at net farm income, for instance, I mean projecting the second highest on record for 25, how much of that, you know, is from I mean, there’s quite a bit of that that’s related to this economic assistance.

00;12;31;25 – 00;12;53;01
Dr. Hunter Biram
I mean, 70% of the receipts for this, upcoming year are going to be, economic assistance payments. And, I mean, we’re looking at the $35 billion in economic assistance or ADHOC disaster assistance from this and from the weather related, hurricane related disaster assistance. And, you know, that’s a that’s a record. And so what does that tell you?

00;12;53;01 – 00;13;11;09
Dr. Hunter Biram
You know, that that tells you that a lot of losses are occurring from country. It’s very important to protect our farmers. But also tell us that our farm saving is not working. We shouldn’t have to use ADHOC assistance. We should not have to use that farm safety net should work to, make sure that farmers are staying?

00;13;11;10 – 00;13;12;08
Dr. Hunter Biram
Well,

00;13;12;11 – 00;13;13;00
Riley Smith
well.

00;13;13;02 – 00;13;17;26
Riley Smith
Everybody’s always told me some money is better than than no money.

00;13;17;29 – 00;13;21;14
Dr. Hunter Biram
Hey, whatever gets you through, I would agree that, you know, whatever gets you through.

00;13;21;21 – 00;13;25;11
Riley Smith
Atleast there is economic assistance. And there isn’t any.

00;13;25;13 – 00;13;47;20
Dr. Hunter Biram
Yeah. And it’s going to look different. I will say it’s goal at different by by crop was okay whatever look different. It’ll look good by county and operation because it’s based on payment. The actual pay that a borrower would receive is based on planted acres and 50% of prevent plant acres, which I know I’m going to say is an FSA permit plant number not a RMA prevent plant number.

00;13;47;20 – 00;14;12;13
Dr. Hunter Biram
So which planted and failed acres are essentially a portion of failed acres will be eligible to receive payments. And so what we’ve, you know what we’ve found is that the top five counties receiving assistance will be Mississippi County, Craighead, Poinsett, Phillips, and Clay County. And they all account for 8%, 6%, 6%, 5%, 5%, all assistance, respectively.

00;14;12;15 – 00;14;38;21
Dr. Hunter Biram
And in terms of the top crops, we’re looking at rice, soybeans, cotton, corn. Then you receiving the the most assistance, mostly going to be based on eligible acres is going to drive most of that. The rice going to capture 37% of that jury, 6 million or based 31%, cotton 20%, and corn items. So that’s just a real high level breakdown issue.

00;14;38;24 – 00;15;01;05
Dr. Hunter Biram
And another thing that I want to know before we hop off here, is actually, you know, right. And, we worked with the, roll in Farm Finance Policy Analysis Center at the university hearing on this one thing. Right. And I was curious to know was, to what degree of the payments actually being helpful because. Right, like that, like, like what you just said, you know, some is better than nothing.

00;15;01;07 – 00;15;24;12
Dr. Hunter Biram
And so we were asking the question, okay, well, to what degree is the sum doing something? And so we looked back at, you know, the differences in the amount of, cost of production, according to our crop enterprise budgets that are covered by the crop receipts across tons yield. And by that economic assistance all together.

00;15;24;12 – 00;15;48;25
Dr. Hunter Biram
So just think of it as, you know, total money that can be used to pay for 2024 expenses. For instance. And in rice, with the assistance, only 87% cost is covered. You want ideally at least 100% of the cost to be covered. But only 87% of cost is being covered for rice. 6,766% for cotton, 79% for corn, 55% for soybeans.

00;15;48;28 – 00;16;09;10
Dr. Hunter Biram
So across the board with the major crops in Arkansas areas, we’re still not going to be able in non-law cases. But, you know, by and large, borrowers are going to be in trouble, in Arkansas, to be able to cover those costs for 2024 is that and that’s what we’re showing. This is under a rental agreement because most acres in Arkansas are going to be rented.

00;16;09;12 – 00;16;10;23
Dr. Hunter Biram
So this wasn’t.

00;16;10;25 – 00;16;17;03
Riley Smith
So thats with economic assistance. And what they received price received on the.

00;16;17;05 – 00;16;42;14
Dr. Hunter Biram
That’s. Yeah. And that that. Yep. That’s crop receipts. So the way I’ve got it you know laid out here would be rice had $1.56 billion of crop receipts. So that price times yield total receipts. Economic assistance was about $106.6 million. That you had 106.6 million to that 1.56 billion. You get, need to I thought I had that on my table here.

00;16;42;14 – 00;16;57;10
Dr. Hunter Biram
So we’ll do the one point, six. I guess 1.568 billion zero all,

00;16;57;13 – 00;17;18;14
Dr. Hunter Biram
Or it. Okay. Well done. I’m going to try and do this on my hand. I’m gonna just go straight to the report. I’m out there. It’s a really large numbers. It’s it is. It’s like I said, one point. Rice at one point.

00;17;18;17 – 00;17;29;28
Dr. Hunter Biram
Five, $6 billion and crop receipts. And the.

00;17;30;00 – 00;17;59;08
Dr. Hunter Biram
Okay. And then. Yeah. So you added 100, and now you’re 101.67 million. Sorry, everybody. The total value crop receipts for rice plus economic assistance. That’s $1.6 billion, which is going to be 87% of the total cost of production, which we’re calculating is 1.92 billion. So that’s the main takeaway. Everything receipts wise payments wise 1.67, expenses 1.92. So that’s not really able to cover expenses.

00;17;59;08 – 00;18;12;06
Dr. Hunter Biram
That’s what I’m trying to say. And that’s in the case of rice, that’s only going to be 87% of the expense to being covered. So we do this calculation for the other crops here. So you know cotton 66% corn 79% soybeans 55%.

00;18;12;08 – 00;18;13;09
Riley Smith
Wow.

00;18;13;12 – 00;18;15;28
Riley Smith
Well soybeans took a hit.

00;18;16;00 – 00;18;23;16
Dr. Hunter Biram
They really did that number really shocked. Ryan and Me whenever we, whenever we were together. But we.

00;18;23;19 – 00;18;25;18
Riley Smith
It’s sad.

00;18;25;21 – 00;18;32;10
Dr. Hunter Biram
Yeah. So mainly motivates just how important it is getting farm bill across the finish line. Oh, this year is.

00;18;32;12 – 00;18;43;28
Riley Smith
Did you, I’m curious. Did you happen to do the just cash receipts? Comparative to the cost like take out.

00;18;43;28 – 00;19;08;12
Dr. Hunter Biram
Yeah, yeah. I mean, just receipts for rice 1.56 billion. Expenses 1.92 bill. So, I mean, if you take that ratio, that’s a quick one. We can do that. That’s, 81%. So economic cost isn’t the catch for another 6%. But still it’s not. We like to share you know to me a break even that’s not breaking even either right.

00;19;08;15 – 00;19;21;11
Dr. Hunter Biram
But all this all all these values are in the report. So, I wrote a summary of the report that we in our newsletter. And so we encourage our listeners to go read that report, check that out. To get more detailed analysis. Okay.

00;19;21;13 – 00;19;27;16
Riley Smith
Well, great. Well, Dr. Biram I think, we covered everything.

00;19;27;19 – 00;19;50;18
Dr. Hunter Biram
Well, hey, I mean, I think we had a lot of good information here. You know, it’s good to know why was in place, you know? Cool. But I think it’s more important right now. Let’s be focusing on the Farm bill and getting it across the finish line. Curious to see what changes can be on the pipe line. I think we should cover a more farm bill specific podcast later in a with some beginning of the episode here today, we might do a deeper dive and later.

00;19;50;18 – 00;20;14;10
Riley Smith
Don’t know, we’ve got kind of two two weeks here coming up that we, we’re hunting some hunting some topics to cover, relative to, to the time period. And, I know middle of March that me and Scott are going to sit down and do the March WASDE report. So that will be the first report for the 20, 25 year.

00;20;14;12 – 00;20;25;01
Riley Smith
Should be and, looking forward to that. But, you have any last comments or anything else you’d like to add before we wrap this thing up?

00;20;25;03 – 00;20;48;04
Dr. Hunter Biram
I think, there’s definitely a lot of work to do, and there’s a lot of topics that we can cover. And I know we got some exciting stuff. Another pipeline. I mean, we do have perspective. We do have, sorry, we have ag outlook for next week. And that’s what we’re we’re going to have a better idea, maybe, you know, at least starting to think about where prices might actually be for the 25/26 marketing year, looking at the potential acreage, some crops for the current crop year.

00;20;48;06 – 00;21;05;05
Dr. Hunter Biram
And it’ll be interesting to see what happens there. And then, like you said that the WASDE the, we’ll get to talk about our PLC decision. I’ve already been talking about at production meetings where we will do an episode on that. And so yeah, there’s a lot of things coming down the pipeline. I think, our listeners will be really interested to hear more about.

00;21;05;07 – 00;21;29;22
Riley Smith
I think, something to, talking about some of the, the I got introduced to new term, shiny apps that you and Ryan create, something that has been I’ve noticed a lot of producers or growers and friends of mine and other people in, in this field talking about is the profit loss generator that we covered at the beginning of January.

00;21;29;22 – 00;21;56;27
Riley Smith
I noticed that table is getting getting pushed around to a lot of places, and a lot of people are questioning it and talking about break even yields and breakeven prices and expected yield, expected price. That’s been a very huge, huge tool to use. And I think we’re whatever comes down the pipeline, I think utilization of those shiny apps are becoming more and more in use.

00;21;56;29 – 00;22;22;02
Riley Smith
Because of this crop price received declining and input prices steadily inclining. So for our listeners, if you’re not subscribed to the newsletter, you need to go check out the newsletter, get subscribed because the newsletter now covers, as far as commodity prices go, work with Scott Stiles, and he is actually put together this coming harvest year.

00;22;22;04 – 00;22;45;05
Riley Smith
He has already started including the future prices on that too. So we can compare them to what’s March delivery well I say march delivery, March prices is for like say corn. And then you’re looking at September corn as well. So whatever you know you’re delivering on 25 or on the 24 crop. A lot of guys should be, you know, halfway deliver.

00;22;45;08 – 00;23;03;29
Riley Smith
Some of them may still be delivering, some might be wrapped up already. But looking at those future prices, it’s looking like we’re at the same, kind of the same price scale as we was this past fall.

00;23;04;02 – 00;23;28;09
Riley Smith
But without anything else. Dr. Biram I appreciate you taking the time out of your busy schedule to sit down and talk about economic assistance. With. There isn’t anything else. We’re going to wrap this thing up. All right, well, y’all stay tuned to my market report. Thanks. All right, guys, back with the market report March 25 Corn current price is at $4.98 per bushel.

00;23;28;10 – 00;23;56;13
Riley Smith
Month agos price was at $4.84 per bushel. That’s up $0.14. And a year ago, price was at $4.19 per bushel. That’s up $0.79 at March 25 Rice current prices at $14 per hundredweight. A month ago, price was at $14.81 per hundredweight. That’s down $0.81. And a year ago, price was at $18.18 per hundredweight. That’s down $4.18. March 25 Soybeans current price is at $10.32 per bushel.

00;23;56;15 – 00;24;27;26
Riley Smith
Month agos price is at $10.34 per bushel. That’s down $0.02 and a year agos price was at $11.79 per bushel. That’s down $1.47 July 25 Wheat current price is at $6.20 per bushel. Month agos price was at $5.61 per bushel. That’s up $0.59 a year agos price was at $5.80 per bushel. That’s up $0.40 a March 25 Cotton current price is at $0.60 $0.66 per pound a month ago.

00;24;27;29 – 00;24;52;16
Riley Smith
Price was at $0.68 per pound. That’s down $0.02 and a year agos price was at $0.91 per pound. That’s down $0.25. Your weekly U.S average peanuts current price is at $496 per ton a month agos price was at $538 per ton thats down $42 and a year agos price was at $470 per ton. That’s up $26. And that’s your weekly commodity futures this week.

00;24;52;23 – 00;25;19;23
Riley Smith
Your fertilizer prices this week Urea is at $550 per ton. Ammonium nitrates at $400 per ton, ammonium sulfates at $510 per ton, DAP is $762.50 per ton. Triple Super phosphates, at $745 per ton, potash is at $432.50 per ton. AG lime is $52.50 per ton, and your pellet lime this week is $225.88 per ton. Your diesel prices this week.

00;25;19;24 – 00;25;41;29
Riley Smith
Off road diesels $2.80 per gallon. Highway diesel is $3.31 per gallon. And your Mississippi River level at Memphis, Tennessee this week. Current levels at 28.04ft and a year ago was at 15.29ft. Want to thank you all again for joining in on another episode of Morning Coffee and AG Markets. We hope you enjoyed it and enjoyed your morning coffee this morning as you tuned into another episode.

00;25;42;01 – 00;25;59;24
Riley Smith
So until next week, we’ll catch y’all on the flip flop. Bye bye now.