Profitability

Profitability


Jul. 05, 2022

by Diana DeHart

Crop conditions Crop conditions across this region continue to vary but considering what the crop has been through in this area this growing season things look relatively good. I’ll start by noting that the US Drought Monitor for the week of June 28th shows no change in drought improvement throughout most of the Western Midwest and Southwest, except for nearly all of New Mexico and a small portion of southwest and south central Colorado which improved marginally. A slight degradation was noted in portions of eastern Texas, southwestern and south central Missouri, and northern Arkansas and portions of Mississippi. No improvement was seen in Nebraska’s drought conditions or the driest areas of western Iowa. Throughout the month of June, I have traveled across parts of central and east central Iowa (along I-80 and highway 30 east & west) and down I-35.  Crops look good across most of this area of Iowa, although it is evident, they were planted later than normal. Northwest Missouri, Southwest Iowa, Southeast Nebraska, and Northeast Kansas crops look the best of anywhere I have traveled this month.  On average the area planted later than normal, but the crop has made great progress and is in great condition.  Northcentral Missouri and east experienced wetter conditions early in the planting season and that crop is not as mature and many soybeans were still being planted the last week of June.    Lincoln, NE to Grand Island, NE is an area that has been hard hit with high winds and hail damage.  Many irrigation systems and properties have been damaged in addition to the crop.  As of June 24th, much of the corn crop was once again emerging and nearly all fields had been replanted, but irrigation repairs were far from complete. Traveling to eastern New Mexico in mid-June confirmed the extremely hot and dry conditions across the panhandle and southwest.  Wheat harvest was well underway, but producers in Oklahoma, Texas, western Kansas, and eastern Colorado confirmed a poor yielding wheat crop.  Portions of this area did receive some beneficial rains in late June, but the area is still moisture deficit, and any wind and high temps will take an additional toll on those crops if they persist into July.   Basis for corn in the region has remained strong, especially for old crop corn.  Feedlots in western Kansas have been reporting $2.00+ versus the July, with some trades near $3.00 over.  Even in western Missouri and northern Arkansas we have seen old crop corn basis values at $1.50 or better.  New crop corn basis has remained steady in most areas with some areas like the Arkansas feed market working slightly higher.  Soybean basis remains steady to slightly higher in the Kansas and western Missouri areas as well, although not as spicy as the corn market.  Wheat basis has lost some ground during harvest as expected.  With a short HRW crop and futures down significantly I would expect basis levels for wheat delivered post-harvest to improve.   Upcoming events Check out these upcoming events in our region. Oklahoma Cattlemen's Association - Norman, OK, July 22-23 Arkansas Cattlemen's Association - Hot Springs, AR, July 28-30 Texas A&M Beef Short Course - College Station, TX, August 1-3 Coming County Fair (stop by our booth!) - West Point, NE, August 11-14 Community Builder events in the following locations: Fort Dodge, IA, July 12 Huxley, IA, July 13 Keystone, IA, July 14 Anita, IA, July 19 Independence, IA, July 20 Monticello, IA, July 28 Perry, IA, August 4 Marshalltown, IA, August 9 Grinnell, IA, August 10


Jul. 05, 2022

by Bill Prince

Greetings from the Eastern corn belt! The heat we received early in the season has plants up and growing. However, irrigators have been running, where available, as Indiana and Ohio have been dry. Signs of stress are visible, and farmers are saying corn is rolling up and needs moisture. Producers are concerned about what this might do to beginning ear development prior to pollination. The later planting start may push pollination back a week or two allowing for moisture to develop. Higher temperatures can also allow for greater possibility of pests and disease. Crop conditions Condition scores for 6/27/22 showed an 11% decline in GTE for Indiana, a 9% decline in Ohio, and a 24% decline in Kentucky. The national average is 67% GTE better than 64% last year, on a crop we thought looked pretty good. We will continue to monitor weather patterns and keep you posted in our communications. The good news is spot basis is still strong. If you see a fall basis that looks average or above, it may be a good idea to take a little risk off the table. Hats off to Kevin McNew, Chief Economist at FBN®, and his team for their excellent work and analysis on the . The results were directionally in line with the USDA numbers. Thanks to all of you who participated, as the data is from you and the results are for you. Upcoming events Check out these upcoming events in our region.


Jul. 05, 2022

by Nicole Tonak

Upper Midwest/Dakotas have finally finished up with Spring planting. You, the producer, did a great job of getting as many acres as possible planted, under some tough conditions. Unfortunately, not all acres were planted, there are PP acres scattered throughout the region. Crop conditions As Spring planting progressed over the past few months, acre changes due to weather were inevitable. Spring Wheat planting was a struggle early on, and even though some acres were switched, ND was able to get most wheat acres planted. Higher input costs, along with grain markets, pushed some corn acres into beans throughout this region. In much of the northern region, even though seed was planted into soggy ground, and not under great conditions, things are drying out quickly. With the crop now emerged, it’s trying to catch up from the late planting dates, however, we are still behind. Early planted Wheat acres look good and are on track so far at this point. Corn and beans are for sure behind. Spraying has been underway, and with the slow growing to this point it looks like there could be additional spray costs ahead to keep things under control before canopy. The mid-June change to cooler temps has taken some stress off during these early growing days, although it looks like the heat will reappear in July. Moisture will be needed to compensate for any excessive heat that comes in the next 30 days. Recent market setbacks ahead of USDA’s June 30th acreage report did cause concern among some growers with uncertain yields projected throughout the upper Midwest. As advisors, we want you, the grower, to be comfortable with the sales you’ve made or additional sales yet to make.  With this yield uncertainty, I encourage you to watch for any changes +/- and adjust your percent sold accordingly to maintain accurate records ahead of harvest. If you have any questions regarding the markets or how to protect that risk going through the summer, I’d be happy to visit with you! Basis levels throughout the region are still strong. Most facilities/end users have rolled and are using new crop futures, making basis level adjustments to complete the cash prices for summer. As you look to summer cleanout, be mindful of road construction/detours and closures to ensure a seamless trip to the scales. Stay safe, Stay hydrated!  Enjoy your summer. Upcoming Events Check out these upcoming events in our region. Minnesota Honey Producers - St. Cloud, MN, July 6-8 Dakota Fest - Mitchell, SD,  August 16-18 R Calf Annual Convention - Deadwood, SD, August 18-20


Jul. 05, 2022

by Kevin McNew

Another big USDA report, and another moment where many commodity analysts were caught off guard about acreage estimates.  Heading into the June Acreage report, traders collectively believed USDA might increase corn acres by 400,000 from USDA’s 89.5 million estimate in March. Conversely, the trade expected a modest decline from USDA’s March soybean estimate of 91.0 million to 90.5 million in June.  Ahead of USDA’s June 30th report, —  based on member contributed data — which told a much different story. Namely, soybean acres were likely to fall much more aggressively than the trade expected, and our peg was at 89.0 million acres — a full 1.5 million acres less than the average of analysts. Indeed, USDA’s June soy acreage forecast at 88.3 million acres was a shock to the trade but not to s farmers who had read the report and were prepared for a bullish soy estimate.  For corn, USDA was mostly where the trade expected at 89.9 million acres, and although was on the high side of the trade at 90.4 million acres, we felt the bullish bean / bearish corn story warranted corn pricing action ahead of the report. On June 28, 2022, issued sales recs at $6.60 Dec corn futures ahead of the report, and with current post-report values of $6.20 this has seemed like a prudent course of action. Key analysts' expectations vs. USDA's June 2022 Acreage Now two years in as a forecasting group, has demonstrated its proven accuracy around key acreage reports. This is a result of a large number of farmers participating in the surveys, which leads to actionable insights and enhancement of our member’s marketing abilities.  The table below illustrates forecasting accuracies for corn and soybeans of various analysts for the last four acreage reports during which has used member surveys to provide forecasts. Compared to the shown analysts, has achieved a much lower forecasting error during this period with an average error of only 1 million acres. That is 30% better than the next best forecaster, and well below most analysts —  which have substantially larger errors of 1.8 to 2.5 million acres. We believe this illustrates the power and uniqueness of ’s crowdsourced data approach for using member data to improve marketing outcomes. Corn and soy acreage forecast error, 2021-2022 Source: FBN/Reuters/USDA ’s June 2022 Performance on Other Crops Crop FBN USDA Avg Analyst (Range) Spring Wheat 11.4 11.1 10.8 (10.4-11.5) Durum 1.8 2.0 1.8 (1.7-2.0) Cotton 12.4 12.5 12.2 (11.0-12.7) Sorghum 6.6 6.3 6.5 (6.3-6.8) Rice 2.42 2.34 2.45 (2.25-2.6) Source: FBN/Reuters/USDA What it means for the farmer Survey participation is key.  If you were a respondent, thank you. With the report in your hands ahead of others, you were set up to make key marketing decisions before USDA’s release. 


Jun. 27, 2022

by FBN Network

Providing critical intelligence based on the collective actions of our farmer members is a key mission of Farmers Business Network®. That’s why we’re excited to share our annual June Acreage Report as a deliverable to help you make critical crop marketing decisions ahead of USDA’s Acreage Report on June 30th.  Despite some weather-related planting delays in the Northern Plains, we found that increased acreage in Minnesota, Wisconsin and Ohio likely helped push the corn acreage number above the USDA's March reading of 90.4 million acres, up from USDA’s March estimate of 89.5.  Soybean acres are pegged at 89.0 million acres, off from USDA’s March forecast of 91.0 million, also pegged to weather in the Dakotas.  Download the 2022 U.S. Acreage Report “The USDA report usually drives volatility that's three to four times greater than a typical trading day," said Kevin McNew, Chief Economist at FBN®.  "With the weather challenges across the country and an uncertain economic climate, our Acreage Report aims to provide our farmer members with the most comprehensive data and intelligence ahead of this report so they can make the best decisions for their operations," said McNew.  Grain markets continue to be on edge as we reach the midpoint of the US growing season. In March, USDA’s Prospective Plantings report suggested farmers intended to plant less corn and more soybeans than in 2021, with forecasted US corn acres at 89.5 million acres and soybeans at 91.0 million acres. They will release their latest acreage estimates on July 1 based on their farmer survey conducted in early June.  Farmer summary We asked members what their actual planted acres were across 9 key crops. Here are some of the key findings from the survey. Corn  Corn acres are expected to climb to 90.4 million acres, up from USDA’s March estimate of 89.5. While corn acres were down by 500,000 in North Dakota and South Dakota versus the March estimate due to poor planting weather, other states were either mostly unchanged to higher. Key states increasing corn acres versus March were Minnesota (up 400,000), Indiana (up 200,000), Ohio (up 200,000), and Wisconsin (up 200,000). Soybeans Soybean acres are pegged at 89.0 million acres, off from USDA’s March forecast of 91.0 million. Again, weather caused North and South Dakota farmers to plant less soybeans by 500,000 acres versus March’s forecast, but other states also pulled back on soy plantings as some switched more into corn, cotton and spring wheat. What it means for the farmer Many farmers have faced challenges this spring as unusually cold and wet weather handicapped planting progress in the Upper Midwest and Northern Plains. Meanwhile, in the Southwest Plains, persistent drought took its toll on winter wheat yield potential, and likely influenced some spring planting decisions as farmers sized up the risks of the drought extending into the summer. Get the free report If you'd like to read the full report, get your free copy today. Members can access this report and more in the  Reports section  of the   app.


Jun. 24, 2022

by Kevin McNew

After a steady climb over the past six months from $5.50 to $7.50 a bushel for the bellwether December 2022 futures contract, the past three weeks have seen relative choppy trade keeping prices hovering around the low $7 mark.  USDA’s acreage report at the end of June along with US growing season weather will be key drivers for deciding if futures can reach new highs heading into harvest. Likewise, basis levels for fall delivery will be adjusting as we get closer to harvest and estimates of new supplies start to dial in. Download the 2022 U.S. Acreage Report Current cash forward contracts which quote new-crop basis for delivery this fall have been generally trending higher in the Western Cornbelt but flat to a bit lower in the Eastern Cornbelt. Last year had big corn crops, especially in Ohio and Indiana, which has kept spot basis levels in those states below normal for much of the past six months. Meanwhile in the West, dryness in the Plains and lack of grain supplies has underpinned spot basis for much of the year.  Is this a good time to be locking in the new-crop basis for delivery at harvest? Or would you be better off waiting for new-crop basis to improve? To answer that, we examined 2006-2021 basis bids at harvest for key states and developed our Basis Model to help guide marketing decisions. This model is tuned into a number of factors like US and local production, stocks, ethanol, and exports and gives a basis forecast based on the expected supply and demand situation for this fall.  The results of the forecasts are presented in the chart below for 15 key states. In addition, we illustrate the current year new-crop basis averaged across buyers to compare whether current basis offerings are above or below expected basis levels at harvest. Of the 15 states, only 2 states (KY and MO) show current new-crop basis quotes that are at or below the forecast value for the state. Most states have forecast basis that not only is higher than current quoted basis for that state, but that also is above the long-run average basis at harvest. The key drivers of this are declining US carryout expected for 2022 as well as fairly sizable changes in local production due to acreage changes between 2021 and what is expected in 2022. If USDA were to find even lower acreage in the June survey, and/or if yield potential erodes over the season, then this could add more basis upside this fall. Falling production combined with near-record exports and ethanol production expected in 2022 likely keeps local basis supported heading into harvest, and yet another market where farmers are better off waiting to price on.  New-crop corn basis forecasts Click here to enlarge the image. What it means for the farmer A tightening US and global corn market is unlikely to get corrected in the next six months. Most end users are not eager to bid up basis for this fall, but as the growing season progresses we expect the corn crop size to continue to be downgraded, which likely opens doors for better basis opportunities closer to harvest than what exists today.


Jun. 23, 2022

by Mark Wilson

Last week, the Federal Reserve hiked its interest rate by 0.75% in an effort to combat inflation. And while markets are expecting a similar rate hike in the not too distant future, this is a first step to decelerate inflation which is at its highest in the last 40 years.  According to Kevin McNew, Chief Economist at FBN®, the Fed will need to do more interest rate hikes in the next 6-12 months. Join Dan English, General Manager of FBN® Finance and Kevin McNew as they discuss why the Federal Reserve decided to hike interest rates, what that means for farmers and how can help alleviate some of the uncertainties of a fast changing economy.  What you’ll learn Click on the chapter links within the video to jump to each section: Why the Fed increased interest rates (00:10) What farmers should focus on (04:39) Why to consider Farmland Capital (05:24) What’s happening in the energy market (08:05) What it means for farmers (11:48) Watch now Solutions to grow your business Farmland Capital Farmland Capital provides you the capital you need without impacting your original loan. Learn more here or start your application today . Operating lines Inflation is impacting everyone. Operating lines will help you fund your operation as you see fit. Apply today and get your approval decision instantly. Land loans Rising interest rates might not impact your decision to purchase the perfect land. We want to help you finance your dream, apply for a land loan now . Crop insurance Inflation is impactful and everything counts. Protect your crop commodity and learn more about our personalized crop insurance solutions . Read the full transcript (00:00): I'm Dan English. I'm the general manager of FBN® Finance. And I'm here today with Chief Economist Dr. Kevin McNew. Hi Kevin. (00:08): Hey Dan, how are you doing? (00:10): Good. Well I think as a lot of people have seen now last week, the Federal Reserve hiked interest rates quite a bit.  And I think even a little bit more than what had been expected, maybe two or three weeks before that. Maybe could you just walk me through what the news was that prompted the Federal Reserve to raise rates and what that means? (00:32): I think the Fed is realizing that they got a late start to this inflation issue. You know, a lot of us in the economic world have been saying for the last year that inflation is a problem and they're just now kind of getting their act together.  And they did need to raise interest rates a quarter of a point more than what was maybe expected, but absolutely it's needed.  We have inflation that is well over 8%, 8.6%, according to the last reading, which is  at or above the highest rates we've seen in over 40 years. So the Fed has a lot of work to do. I don't think this is the end of the inflation or the interest rate hike story.  Markets are already kind of expecting another similar magnitude rate hike in the next meeting next month and probably another half a point gain before the end of the year. So yeah, we've got some interest rate movement company to curb this runaway inflation, (01:33): Do you think that the Fed is going to be acting like this is aggressive enough? Or do you think that they'll have to continually revise upward what they're doing to be able to combat inflation? (01:46): Normally, the Fed is really trying to watch inflation, unemployment, the economy, and really in the last 30, 40 years, we haven't worried too much about inflation. And so having to watch inflation is a new issue. The Fed's going to  have to deal with it.  And, and like I said, they got a late start to it, obviously because of the issues around COVID. And I think they're going to  be laser focused on what inflation is doing as a result of raising interest rates. They don't wanna put the economy in a recession, but their number one priority right now is tamping down this inflation that is just really problematic for the economy going forward.  So I think it's all going to  be about inflation readings as we get new data coming out. We're going to  see some pull back and economic activity and surging prices. I personally don't think we're, we're going to  be seeing something really quickly. That's going to  change the Fed's outlook, which is they're going to need to do more rather than less in the next six to 12 months. (02:54): Do you expect that raising rates, dialing back their bond buying program, all, all the efforts that they're doing to have more restrictive monetary policy that's longer or your interest and higher, you know, baseline expectations for years to come? (03:18): That's a tough one, Dan. I mean, because some of this is definitely, you know, policy related. I was a huge proponent of you the Fed being more aggressive about interest rate hikes shortly you know, six months to a year after COVID because we did inject such fiscal stimulus into the economy and that's now having, you know, profound impacts.  But beyond that, we have what's going on in Eastern Europe, issues with energy prices and all these external exogenous forces that are really out of the Fed's hands. And so, they're trying to do this through a series of interest rate hikes and, and quantitative tightening to kind of throttle back the system, but, there's more action in the global market than the Fed can realistically control.  From your standpoint, as you kind of see and, and see what's going on in the agricultural lending space, I'd be curious if we're in this interest rate environment for the next two to three years, where should we be telling our farmers to focus on?  Should we be focusing on long term debt consolidation? You know, all those kinds of things about investment decisions become so important in this environment. (04:39): It depends a lot on the farmer's personal situation, their balance sheet. But one thing that we encouraged a lot of people to do and worked with a lot of farmers to do over the last year to two years, was to refinance at these lower rates before the most recent rate hikes.  For folks who have done that, they have a very different problem going forward, which is they have an amortizing loan that they're paying off every year where they have a very low rate. And how do they replace that? How do they cover the additional incremental costs as they, you know, either refinance that to take some cash out down the road or come in with higher and more expensive sources of debt. (05:24): One thing we're encouraging a lot of people to look at is we have a Farmland Capital program where we can take a second position and they can keep the first position in place.  At the low rate, we think that's going to  be a great option for a lot of farmers. But more generally, I would say the risk of this going even higher still seems pretty significant to us.  And just the pace at which the rates have increased over the last six months has really been astounding. I think where folks can lock in rates for the next 10, 20, 30 years, and have some certainty that they're going to  be able to remain profitable. We're encouraging folks to do that.  If rates come back down they can always prepay and refinance at a lower rate, but where they can lock in longer term, we think that's definitely the right thing now. (06:13): As I think back long term, I've been farming all my life and in the ‘80s as a farm kid, I remember the interconnectedness of coming of the ‘70s, roaring with bull markets.  The ‘80s brought hyperinflation and land values going through the roof. And then in the early ‘80s was a big farm depression. I know there's many gray-haired farmers out there that have the kind of experience that have seen these kinds of ebbs and flows.  What I've been telling them as it relates to farmland is I don't think we have a huge downturn in farmland values, and we don't see a huge recession or depression even in commodity prices, because it's a much different story today than it was in the ‘80s where we had oversupply issues. This is not that situation. We don't have an oversupply issue.  We have an over demand issue and commodity prices may back down a little bit but I think farmland values don't tank and bottom out or, or turn south quite sharply. If there's ways to capture more farmland as they fall down, or in your case you mentioned the Farmland Capital situation, that's a really intriguing concept. (07:31): I think for farmers who are looking who may be concerned about that, that's a way for them to take a little bit of risk off the table while still being able to have upside control and ownership of their farm.  One thing that we're paying very close attention to on the financing side is will farmers be able to support their farm at these, you know, lower prices? Maybe you can just talk a little bit about what the forward curve of green prices are doing. And it sounds like you think some of these prices are here to stay for at least a little while. (08:05): They're definitely catching up as we get more permanency around the demand side of the story. A lot depends on energy markets and I don't think the energy situation is going to improve dramatically.  Obviously, a lot depends on the situation in Eastern Europe. Overall we're in a much different energy paradigm.We're trying to make this global transition from fossil fuel based energy to clean energy. And that's not a simple, easy solution. It's going to involve a lot of volatility. And I think this is just the start of what will be at least another decade of volatility in the energy markets, which in my opinion means more benefits for agriculture as we are linked in the biofuel space.  For 15 years we've been linked with ethanol but now there's such a big push around renewable diesel and that translates into demand for soybeans, for example. So I don't see a ton of downside risk, as I said, it's not to say we won't have ups and downs. But the forward curves are starting to look better and catch up. I do think the days of $3 corn and $8 beans are probably pretty far behind us until something dramatically shifts either in the energy sector or other other places. But there's just so much pin up demand if you will. (09:33): That's great news for our farmers. And one thing that I know a lot of people see as one of the drivers of energy is the war in Ukraine and the resulting markets. It sounds like even if that were resolved tomorrow, we're talking about more fundamental issues than the short term issues.. (10:00): Economists will call it a knife edge solution as we try to transition from fossil fuels to clean energy. A knife edge is really razor thin. And so a nice, smooth transition is very hard to achieve because there's so much imbalance.  Just to give you some perspective, since COVID, we have seen a downgrade in refining capacity in the U.S. and that's not out of coincidence. That's because the big oil companies are recognizing either internally or from pressure from outside investors that they have to shift to clean energy.  We're still a society that's heavily dependent on fossil fuels, but the supply of those fossil fuels, whether from crude oil, from refined products, is dwindling because of this pivot. And so, again, it's not an easy solution. I do think you're right. If we did get Russia and Ukraine to resolve for some reason, there'd be a pullback. But I don't think we're done with the days of a hundred dollars crude and $4 or $5 gasoline and diesel you know, for any time period. (11:22): Well, that's good news for our farmers.  Last question I have for you. Is there anything that you know, could fundamentally alter the inflation picture in the U.S., aside from what the Fed is proposing to do, or is this going to  be something that's kind of hard fought, there's going to be rate increases and it's the situation we're in? (11:48): This is going to have a pullback in investment and all of the investment things that are driven, whether it's real estate, especially home values. But for our farms, I think we're so tied to food, which has an exceptionally highly elastic demand.  That means it doesn't respond much to prices. People have to eat is the main take home message. I think from our farm sector standpoint you know, what would change the paradigm substantially is if energy markets collapsed.  It's hard to see a scenario where that happens. If we go back to the last big energy market downturn of 2007 or 2008, we went from $140 barrel oil quickly down to $40 and $50 barrel oil.  That was really because we saw China on this meteoric rise as a global economy and we needed a throttle price where we could pull back demand.  Until we start to see real signs of demand and pull back, it's hard to see where inflation starts to get tamed. Not saying it won't happen but the numbers I watch and the things I see, we're just not seeing the demand pull back and in the commodity space, I think that's really true.


The USDA recently announced an updated livestock disaster aid addressing increased supplemental feed cost in 2021. The ELRP payment will be based on data from the 2021 Livestock Forage Disaster Program (LFP).  CCC-853 (Livestock Forage Disaster Program Application) AD-2047 (Customer Data Worksheet) CCC-902 (Farm Operating Plan for an Individual or Legal Entity) CCC-901 (Member Information for Legal Entities, if applicable) FSA-510 (Request for an Exception to the $125,000 Payment Limitation for Certain Programs, if applicable) CCC-860 (Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification, if applicable) AD-1026 (Highly Erodible Land Conservation (“HELC”) and Wetland Conservation (“WC”) Certification) Phases of the ELRP payments Phase 1 of the payments is expected to total $577 million, basing the payments on percentage of an eligible producers’ gross 2021 LFP payment — 90% for historically underserved producers and 75% for all other producers. And, the payments will be subject to a payment limit. Phase 2: USDA said it was evaluating impacts of 2021 and wildfires on livestock producers as it develops the Phase 2 component.  Phase 1 ELRP eligibility Producer and livestock eligibility for ELRP aligns with the eligibility requirements. Only 2021 LFP participants are eligible for an ELRP payment under Phase 1. Livestock producers must have suffered grazing losses in a county rated by the U.S. Drought Monitor as a D2 (severe drought) for eight consecutive weeks or a D3 (extreme drought) or D4 (exceptional drought) during the normal grazing season of the 2021 calendar year. Livestock producers who were not allowed to graze their permitted federally managed lands due to wildfire are also eligible for ELRP payments.  ELRP payment calculation and limitations When calculating an eligible producer’s Phase One ELRP payment, Farm Service Agency (FSA) will use the producer reported (CCC-853 form) livestock inventories and forage acreage or restricted animal units and grazing days for the 2021 calendar year. Payments will be equal to the eligible livestock producer’s gross 2021 LFP payment multiplied by a payment percentage. For historically underserved producers (i.e., socially disadvantaged, limited resource, beginning, and veteran), the payment percentage is 90%, with a payment percentage of 75% for all other producers. Eligible producers with a CCC-860 on file with FSA for the 2021 program year qualify for the 90% payment percentage. Under ELRP, Adjusted Gross Income (“AGI”) limitations will not apply, however there are payment limitations for eligible producers. The payment limitations will be determined by the producer’s or legal entity’s average adjusted gross farm income, which is income earned from their agricultural operation. If an eligible producer or entity, other than joint ventures or general partnerships, has an average adjusted gross farm income of less than 75% of their average AGI for tax years 2017 through 2019, they cannot receive an ELRP payment of more than $125,000. For an eligible producer or entity, other than joint ventures or general partnership, with an average AGI of at least 75% that is derived from agricultural activities, they may be eligible for an ELRP payment of up to $250,000.  Eligible participants seeking the increased limitation must: File form FSA-510; Provide certification that their average adjusted gross farm income is at least 75% of their AGI; and Provide certification from a licensed Certified Public Accountant or attorney that the participant qualifies to receive the increased limitation. Additional USDA Assistance Opportunities The announcement also included information on a new crop-related disaster effort named . USDA announced a two-phase approach for diversified, row crop and specialty crop operations affected by an eligible disaster event in calendar years 2020 or 2021. USDA also indicated there will be additional relief through the . The ELAP program provides emergency assistance to eligible producers of , and for losses due to disease (including cattle tick fever), adverse weather, or other conditions, such as blizzards and wildfires, not covered by LFP.  The additional ELAP funding will assist producers with the increased cost of hauling livestock to forage. The ELAP compensation is retroactive to 2021 and will also be available for losses in 2022 and subsequent years. The deadline to request all ELAP assistance for 2022 calendar year losses will be Jan. 31, 2023. Important Deadlines The deadline to file for FSA’s LFP program is 30 calendar days after the end of the calendar year the loss occurred (i.e. January 31, 2022 for loss in calendar year 2021).  The deadline to file for FSA’s ELAP program is January 30 following the end of the calendar year in which the loss occurred. Producers must file a notice of loss within 15 days after the loss is apparent for honeybee operations and within 30 days for livestock and farm-raised fish operations. More more information on , please contact your local FSA office. To learn more about the Federal Crop/Livestock Insurance programs contact an insurance agent by visiting the or calling 877-204-4645 .  Source:


In response to the severe drought conditions in many parts of the United States, the USDA RMA is suspending the Livestock Risk Protection (LRP) 60-day ownership requirement. The lack of rainfall is causing producers to sell cattle earlier than they normally would due to the difficulty in finding adequate forage. The USDA Risk Management Agency (RMA) has released a stating, for Specific Coverage Endorsements (SCEs) they are suspending the Livestock Risk Protection (LRP) rule requiring livestock owners to own their livestock up to the last 60 days of the endorsement (coverage) period. This is in effect as of . What it means for producers With producers facing a shortage of available forage due to drought conditions, the suspension of the LRP 60-day ownership rule allows producers options to consider. These options include feeding additional hay/supplement to maintain the cows and growth of the calves or selling calves before the expected sale date. Selling the calves “early” will also allow producers to reduce grazing pressure on the remaining forage and to maintain their existing cow herd genetic base.   The SCEs are still subject to verification of proof of ownership. Proof of ownership can include sales receipts, kill sheets, or other documentation that verifies ownership during the insurance period showing the date the livestock were sold or slaughtered.  If you have questions, please reach out to your agent or contact at 877-204-4645 .


Jun. 07, 2022

by FBN Insurance

If you are a livestock producer concerned about drought this year, learn more about Annual Forage policies from Insurance Sales Director, Don Moody and Agent, Roger Givens. This 30 minute webinar walks you through the details the Annual Forage program and who qualifies. Available In: Colorado Nebraska New Mexico North Dakota Oklahoma South Dakota Texas What you'll learn What is annual forage? Why choose annual forage? Availability & eligibility Sales closing Dual use option Q&A Watch now Learn more To speak to an agent about drought protection, please call 877-204-4645 or learn more by visiting our annual forage page .