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A shift in ad hoc payments to farmers might be coming

An ag economist says if the US government continues to cut spending, it could impact direct payments.

David Widmar with Ag Economic Insights says since 2018 ad hoc payments for the trade war, COVID-19 pandemic and weather disasters have averaged more than $17 billion annually, but that could change. “I think this pendulum could swing. We’re still going see ad hoc programs and money in the future, but probably not to this magnitude and probably not as large of a share when it comes to total payments coming the farm economy.

Widmar says since 2019, 73 percent of direct payments have been ad hoc, which means most of funds have bypassed 2018 Farm Bill programs.  For comparison, between 2010 and 2013, ad hoc payments were just $2.3 billion annually.  

He tells Brownfield the ag economy has benefited from ad hoc payments but if funding declines, producers will have to reevaluate their budget. “It’s important for producers to dig through their operations kind of layer by layer and understand how these ad hoc programs have been impacting their operation and how they need to think about those moving forward when it comes to projecting what’s a normal level of cash flow.”

For 2023, ad hoc payments are estimated to be 57 percent of direct payments.

David Widmar: