Disaster Payments May Not be as High as Anticipated

If the new administration backs out price and bases payments only on yield, then these payments likely will be lower

Photo by Clark Wilson on Unsplash

As we continue to review what USDA will do, we need to make sure we are not overestimating these payments. Plus, with a new administration, the name of this program could be something completely different. Therefore, we will likely start to call this disaster aid and not ERP.

We all know that final harvest prices in 2023 and 2024 for most crops were lower than the projected price and in some cases the difference was substantial. For example, I grow wheat in Washington state and the projected 2023 price was $9.58 and the final harvest price was $6.94 which is $2.64 less or 27.5% lower.

We had a drought in 2023 and almost everyone collected crop insurance, both based on yield and price. Will the new disaster aid simply top off your elected coverage level including price and yield or more likely since this is for disaster, simply calculate harvest revenue based on the higher of projected or harvest yield and make a payment based on this.

We have updated our spreadsheet on disaster aid to include a new column based on exactly this calculation and the results can be dramatically different.