SDRP payment #2 details

Chris: Welcome everybody to another episode of the Ag View Pitch. I think this is one that we're going to have, and I don't like calling it breaking news, but it sort of is over the end of this past week. It sounds like the administration and the powers that be kind of figured out what to do with the rest of the income or the rest of the money at the SR— SDRP. So we have Paul Neifer with us today to kind of help us break down and update us kind of what we know at this point and get some information out to, to those of you producers who it's going to impact. And so, Paul, thanks for being here. Appreciate it.

Paul

Neiffer: You're welcome. You're welcome.

Chris: So I guess the first thing I want to do is just have you give us a basic overview of what the announcement was, what it says, and then we'll kind of dive into some of the particulars.

Paul

Neiffer: Yeah, so I think Secretary Rollins was in, I think, Higgenville, Missouri, or something like that. And while she was there, she announced that the SDRP is basically a double up. Let's call it a double up, not even a top up, it's a double up. So, you know, under the first stage 1, farmers got paid 35% of the expected loss or the calculated loss. And so, and that's for '23 and '24. Those are separate calculations, separate payment limits, and so on and so forth. So for those farmers that received their Stage 1 payment, the top-up is going to be exactly the same number unless you're over the payment limit when you finally get the, the final payment. So for example, payment limit's $125,000. Let's say on the first go-round you got $60,000. $60,000 plus $60,000 is $120,000. You're going to get up, you're going to get $60,000.

Now, if you were at $90,000, $90,000 plus $90,000 is $180,000. Well, the limit's $125,000. So you're only going to get in that case $35,000. And that's for each year. And it's a combined limit between Stage 1 and Stage 2. They also— because originally this was going to close next Thursday, April 30th— they extended that deadline to August 12th. I was definitely not surprised about that. Stage 2 has been, you know, I don't want to cuss on here, but it's basically been a cluster. It has not gone over very well. It's been very difficult to calculate. It does not use harvest prices. So a lot of farmers that were counting on a large payment, including myself, in one situation, you got nothing or very little. So, so I definitely wasn't surprised that they extended the deadline. But that's really what we know right now.

Chris: So as far as, you know, you talk about the limitations at the $125,000, are there any other factors besides the STRP in and of itself, if there were other payments that could be tacked on to that that would interfere with how much?

Paul

Neiffer: No, STRP is a standalone. So your payments for ARC PLC don't affect it. Your payments under any other programs, WIP, or well, WIP's not really around too much, but, you know, like EQUIP or CSP or anything, those are all CRP, those are all separate payments. Now, if you are a quote, farmer, you know, you do qualify for an additional payment limit, not additional payment, but a payment limit. And for the corn, soybean, wheat farmer out there, that's an extra $125,000. Now, if you're a specialty crop, potatoes, fruits, vegetables, that type of farmer, then that actually goes up to $900,000. So you go from $125,000 up to $900,000. That's a pretty, pretty extreme increase compared to the typical row crop farmer. But again, that falls under the old rules. The old rules, in order for equipment gains to count, you know, it had to be to your other net farm income.

And this is net, it's not gross. The, the new OBA has changed it to— I think for this type of program, the new OBA rules will be based on adjust or average gross income. So that's much easier for the farmer to meet, but This is still under the old rules because '23 and '24 program.

Chris: Gotcha. Just for clarity, talk about the percentages again for a minute. So 35% was the original— was the original— payment number one. This is number two. But instead of it being 35%, my understanding is it's 70%. Is that—

Paul

Neiffer: well, so 35% plus 35% equals 70%. So, you know, you got— if you got 35% in the first round, and that's another 35%. You get 70% total. So, so whatever you got in the first round, you're going to get in the second round. You just double it. Yeah. Unless you hit the payment limit.

Chris: Yeah. And it's typical me reading government stuff. When I was looking at that, I'm reading and I was a little confused. That's why I have you on here to clarify.

Paul

Neiffer: Well, when they— you know, when they do the actual program, you know, Congress writes the program in there. They have language that says that the farmer cannot receive more than 90% of the damage. So the maximum is 90%. So actually collecting 70%, I think is actually higher than what we ever had under ERP and WIP and so on. So the 70% is actually, you know, pretty good number. And again, I think they were able to get to the 70% because Stage 2A is not based on harvest price, and B is just so difficult to calculate, most farmers gave up.

Chris: How many total dollars were left in there in that from, from, you know, the payment one? And then there was obviously billions of dollars left in that bucket. How much was left?

Paul

Neiffer: Yeah. So, you know, SDRP itself was allocated slightly more than $16 billion. Let's just round it to $16 billion. The dashboard for stage one, there's no dashboard for stage two, but the dashboard for stage one showed that they paid out about $6.7 billion. To date, you know, through maybe last week or the week before. But that number has been held pretty steady. There really hasn't been much under Stage 1. Stage 2, they were estimating on the first go-round they'd pay out about $2.7 billion. I don't think they even paid out a billion, to be honest, maybe a billion and a half, something like that. So, so if we take $6.7 plus, let's say, $1.7, that's $8.4 billion. Well, we can tell right away if they've allocated $16 billion and they're authorizing a double up, they can't have paid out $8 billion yet. So they've paid out $6.7. Like I say, maybe, maybe they've paid out a billion.

I don't think they have.

Chris: And if they, if they double that up, I mean, they're still probably going to be around $15, you know, though it should be easily less than the $16 billion.

Paul

Neiffer: Yep.

Chris: Exactly.

Paul

Neiffer: Yeah, I think they're probably 7.5, so 15. And that allows people that maybe haven't signed up for it can still sign up for it. They got till August 12th. So they got— what are we talking, May, June, July? You know, you should all— not, not quite 4 full months, but 3.5 months to sign up for it if they haven't signed up.

Chris: Okay, so let's talk— that leads into the next question. Let's talk about the process for the producer then. What's the producer need to do or not do?

Paul

Neiffer: Moving forward, I think right now the producer that's already collected under Stage 1 or Stage 2 doesn't have to do anything at all. I think there'll probably be an announcement coming out next week, probably early next week, just indicating to the producer that if you have already collected under Stage 1 or Stage 2, you don't have to go in and re-sign up. Just like we had ECAP, you know, under ECAP they paid out and they didn't quite get up to 100%. I think they got up to— what'd they pay out? 70% originally, and then 29%. But you didn't have to go back in, it just automatically showed up in your checking account. So I think most farmers will likely start seeing payments, if not next week, the following week. Now that's my assumption.

Chris: Theoretically, by the mid part of May, growers would have the funds. Yeah, theoretically, if things work right.

Paul

Neiffer: I've had one person probably send me 8 different emails. Hey, are they going to do it and when are they going to do it? And every time I respond, I think it's going to be yes, there's going to be one somewhere between 25 and I didn't quite go up to 35% just to be conservative and probably it's going to be at mid-May. And I think that's realistically what it's going to be.

Chris: And I think bankers, you know, in budgets, rightfully so from a lender's perspective, wanted nothing to do with anything in those budgets. Yeah, because we left everything clean on all budgets we help people with and renewal time and all that kind of stuff, just because you never know until you get the money. Yeah, that type of stuff, you don't ever know. Um, you know, and I think it's going to be a little helpful. You know, there'll be— I'm sure this, this type of conversation always brings out the interesting conversation in the comments section. So, you know, if, if, you know, it's like my mom always say, if you got something nice to say, say it. If you don't have anything nice to say, then probably just don't say it.

Paul

Neiffer: Yeah, exactly.

Chris: But, you know, it does help, you know, with everything that's going on right now with fertilizer prices and those kind of things. It'll kind of help, you know, the operations that, that are eligible. It's going to kind of be beneficial, I think, and kind of keep things going there. Um, is there anything else? Because I want to ask you a couple other quick questions around these types of topics, but is there anything else with the SDRP that people should know or anything else that I didn't ask?

Paul

Neiffer: No, I think on SDRP, I think we pretty well have covered it. You're just going to get a double up unless you are close to the payment limit, then you're going to just hit the payment limit.

Chris: Okay. All right. So we've heard, like, you know, just conversations floating around in the air around the idea of Congress looking at some other additional aid package, you know, and they were talking about tying it to fertilizer. You know, I just brought that up as something with everything that's going on, the Straight Home Moves and And, you know, and for a lot of farmers, it's probably not something that's as big a deal this year as it really could be in 2027.

Paul

Neiffer: Yeah. So this fall is the key.

Chris: Big time. So is there anything you're hearing with your connections on what's going on or what conversations?

Paul

Neiffer: I think you're probably hearing the same thing I am. $10 to $20 billion seems to be a number. You know, sometimes it's $12 to $15, then it's $15 to $18, but somewhere in that $10 to $20., which would be very similar to, uh, SDRP. Now remember, SDRP was for '23 and '24. This obviously would be, uh, essentially just for 2026. Uh, it would be a 2026 program. Uh, it would be interesting because remember on the FBA that just came out, that was a '25 program, still stuck with the old payment limit rules, you know, $100,000— it was $155,000 now, right? But that, you know, if you were an LLC or an S corporation, you did not get multiple payments. You know, under OBA, we're supposed to start having multiple payments. Now, that could be specifically for ARC and PLC, but I don't think that's the case. I mean, this, this, we'll see.

Matter of fact, I actually got a letter from one of— you know the person very well, I won't mention it on the air here, but I got a letter where the local FSA office, they're an S corp, they have 3 equal owners. They went in and got, you know, filled out a 902E, you know, gave it to the local office. The local office sent out the letter that you typically send out. And on that letter it said, hey, you're a qualified farmer, blah, blah, blah, blah. But you're an S corporation. You only get one payment limit. And this is for the 2026 crop. And we had Undersecretary Fordyce on AgriTalk at the beginning of the month on April 1st or March 31st, one of those dates, come out and basically say, hey, the new guidance from OBA on payment limits is going to come out very quickly. Well, that's almost a month ago. To me, that's not very quickly.

So I'm actually doing a blog post that will go live on Monday on this. And yeah, it's going to be messy because You know, the local office had to waste their time, you know, creating this letter. And I've had two of these and they're both in Minnesota, different counties, but Minnesota. So they've wasted their time. They've sent out this letter and then probably a month from now they're going to have to send out another letter saying, oops, sorry, you actually qualify for 3 payments or 4 payments because the LLC was for 4 equal owners. So we'll see. I'm getting frustrated. I mean, OBA was passed July 4th of '25, you know, almost a full year, and they still haven't come out with guidance. Even SDRP, I'm a little frustrated. They knew, they knew that they could pay out close to 70%. Why didn't they pay 50% to begin with, or 60% or something?

I mean, it's— I, I'm— yeah, I just, I'm frustrated with this administration a little bit.

Chris: Yeah, well, rightfully so. And, you know, there's, there's plenty of that to go around, I think, right?

Paul

Neiffer: Yeah.

Chris: Yeah. So I guess that was really the main question I had. Is there anything else that, that you're watching or any of the stuff you're hearing on fertilizer prices or anything?

Paul

Neiffer: No, I think, I think, as you mentioned, for most farmers, especially maybe in the Midwest, that already pre-bought, just like myself, you know, I pre-bought fertilizer. Probably the issue going on right now is not as big of a deal, whereas this fall, you know, for my wheat up in Pacific Northwest and Missouri, you know, I'm gonna have to apply fertilizer this fall. You know, I'm a little bit more concerned then.

Chris: Yeah, well, I guess we'll just have to wait and see. I'm not sure anybody knows. I just didn't know if you'd been hearing anything, you know, as far as what the—

Paul

Neiffer: No, definitely just the chatter that there probably likely will be something. And, and now Congress can get their act together. This is a mid-year midterm, uh, you know, election year, and, uh, it's not— I would say right now not looking great for the Republicans, but, but we'll see.

Chris: We'll see. Well, whatever, whatever happens, I mean, I think, I think, uh, in an election year there's, there's always all kinds of news and crazy stuff going on. Yep. Yeah, that as well.

Paul

Neiffer: Well, and even, even let's say goes the wrong way, if, if you're a Republican, it goes the wrong way it allows them right after the election to pass something then too. So, because they're still in power at that point.

Chris: Yeah, that. And then also though, I mean, if the Democrats get in there, I think, you know, it's still going to probably be an issue that the Congress either way is going to have to probably have. There's going to be some things to deal with, right?

Paul

Neiffer: Yeah, yeah, yeah.

Chris: I think when it comes right down to the nuts and bolts of things, but Hopefully we get some decent weather and things kind of shape out that way too. I know there's a lot of— there's some planting delays in some areas right now. I'm not sure, you know, it depends on how you want to define it. But I think, you know, it's going to get to the point where it is probably a delayed situation in some areas.

Paul

Neiffer: Well, I can tell you in the Pacific Northwest, you know, where my wheat farm is up there, this is probably the best looking wheat we've had in 20 or 30 years. I mean, the conditions from USDA, I think it was last time I looked, I think it was a week ago, I saw it was 94% good to excellent. And last year at this time it was 56%. So yeah, yeah, there's— and last year I had 135 bushel wheat.

Chris: So yeah, there's a lot of haves and have-nots. I think right now there's the extremely, extremely really good and extremely not so good. And then, you know, somewhere in the middle is where there's a little bit in between. But there's a lot of one or the other, it seems like.

Paul

Neiffer: Let's talk about Yeah, if we're talking winter wheat in Colorado and western Kansas and Oklahoma and Texas, that's not good. Yeah, it's not good at all.

Chris: And you go from really dry to really wet. Yeah, yes, too. Sure. So. All right. Well, I appreciate it. If you can turn the faucet off in my geography, that would be good. We appreciate that. And maybe move some of that water to the areas where they need it.

Paul

Neiffer: So. Yeah, well, that's, that's up to Mother Nature. I don't quite have any control over her.

Chris: I don't think any of us do. So that's what, that's what prayer is for, I guess. For sure. Exactly. Exactly. Sounds good. Well, hey, Paul, as usual, I really appreciate it. If we get more particulars and more information on anything else that's going on as it relates to farm farmers and revenue on that side of things, we'll be back with you. Thanks a lot, Paul. Appreciate it.

Paul

Neiffer: Thanks, Chris.

Chris: Yeah, thanks, everybody. We'll catch you again next time on the Ag View Pitch.