How MFP 2019 County Payment Rates Were Calculated

12:44PM Jul 31, 2019
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Farm programs are often complex, and that is the case for the latest Market Facilitation Program package.( USDA )

When USDA finally announced details of the 2019 Market Facilitation Program (MFP), farmer and industry analysts alike sought to understand how neighboring counties could have different payment rates. Really, they wanted to know how these numbers were determined at all. Pro Farmer’s Jim Wiesemeyer provides this “easy explanation of complex program.”

Farm programs are often complex, and that is the case for the latest Market Facilitation Program package, he says.

The following is a simple explanation of how county rates were established, according to Wiesemeyer:

“For MFP 2.0, there are two components: (1) estimating damages and (2) averaging over damages to calculate the county rate.

“Regarding (1), USDA is using the same modeling approach as last time but changing the reference period. Rather than anchoring to 2017, they are looking over a 10-year period. This time, it picks up more damage to corn.

“But, the real difference is (2). Rather than publishing a rate for each crop (like last time via MFP 1), USDA is simply using that as an input in calculating the county payment this time.”

So, how is the county payment calculated?

“For each of the MFP-eligible crops in the county, multiply (a) the 3-year average RMA yield for the county, by (b) the 4-year average FSA planted acres in the county, by (c) the damage rate for the crop from (1) above. That gives total damage for a crop in a county. Then add all damages across all crops to come up with total damages in the county.

“If you add up (b) across all crops, you get the 4-year average planted acres of all MFP-eligible crops in the county.

“From there, you simply divide total damages by total average planted acres to get the MFP county payment rate.”

Read more from Jim Wiesemeyer at ProFarmer.com 

 

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