Texas: Extension Aid Available When Making Farm Program Decisions

Photo: Nick McMichen

Texas A&M AgriLife Extension Service economist Joe Outlaw didn’t sugar-coat agricultural commodity outlooks at the recent Texas Wheat Symposium. Times are tough.

But Outlaw, Ph.D., co-director of the Agricultural and Food Policy Center at Texas A&M University, told producers there are ways to help reduce the impact of poor market conditions on their operations.

Outlaw told the crowd “prices look flat, a little bit below the cost of production.”

Making above-average yields is about the only way to make money in times like this, he said, “and right now when they look to see what is doing that, a lot of producers are hanging their hat on cotton.”

Another area where producers received a little help was with the two rounds of Market Facilitation Program payments made due to the trade dispute with China, Outlaw said, but they shouldn’t count on another one.

“There might not be another one of those,” he said, but if the trade dispute with China is not resolved, there may be a third.

“The main thing I want producers to understand today is about the current farm bill signup,” Outlaw said. “Many producers want to wait until the last minute to see if there is any new information that might come out before the signup deadline in March.

“I can tell you right now there is going to be no new information that you can’t get right now. No price information will change. So, producers should go ahead and make their appointment with Farm Service Agency now and get that done.”

Outlaw said the Policy Center is again offering a decision aid as in the past that allows producers to weigh their two options, Agricultural Risk Coverage, ARC, and Price Loss Coverage, PLC. The online decision aid was developed by and is available at the Texas A&M University Agriculture and Food Policy Center.

“Looking at it, unless there was a significant yield loss for your county in 2019, most people are trending toward PLC,” he said. “But please, let us help you work through that. We will do it for you. All you have to do is ask.”

A producer must provide the 156EZ form from the U.S. Farm Service Agency for each of the farms and crop insurance records that have the historical yields on it, Outlaw said.

“We can turn it around really fast, sometimes the same day,” he said. “We will walk you through what it says and then you can print it out and take it to the FSA. The main thing is you need to make the most informed decision, not what your neighbor did. You shouldn’t ever just say everyone in the county signed up this way, so that is what I should do. It may be, but it is best to look over your numbers and make sure.”

Outlaw also pointed out that producers need to take advantage of any opportunities to get higher prices when they come.

“These flat prices are the average for this year and the next year, but what happens between those averages is a lot of movement,” he said. “What this type of atmosphere tells us is you need to be on your marketing game. Because in this year, the price spiked up high enough that every producer in this room could have made money selling wheat if they had taken the price when the futures hit those levels. But most didn’t do it, because they were hoping it was going to go higher.”

It’s a psychological thing, Outlaw said. For many producers, they might have had several years where they lost and had to roll over carryover into the next year, so they thought just breaking even was not good enough, and they were wanting “just a little bit more.”

“What generally happens is everyone rides the prices up and then watches them drop back down because they thought it might go just a bit higher,” he said. “So even though we are projecting flat prices, figure out what you have to have and when it hits it, take it at least on a portion of the crop.”

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