Farmers Receiving Bridge Payments Use it for Cash Flow

An ag economist with University of Missouri Extension says farmers have been using the Farmer Bridge Assistance Program payments to help with cash flow.

Ben Brown says, “Whether that’s to pay down debts or to keep it in liquid cash to pay for inputs throughout the growing season until we get to harvest. It’s very much a liquid asset to most producers.”

Brown says it’s unclear whether debt is being repaid with the ad-hoc assistance, because farmers also need flexibility to pay expenses. “Some banking institutions are probably asking for that to be used to pay down some past due operating notes.” He says the USDA has paid out about half of the available funds in the FBA program. The USDA has allocated $11 billion for the program.

The potential for even more ad-hoc assistance exists, but Brown says it will require a legislative vehicle to pass in Congress.

EDITOR’S TAKE:

It makes sense that farmers/ranchers would use the money received from the federal government to finance their operating expenses. That way they would borrow less money or not dip into any cash reserves. With the situation in the Middle East hanging over fertilizer and petroleum markets, the decision to use government funds first seems wise under the circumstances. Unfortunately, the geopolitical conditions will likely trim margins even further and increase the need for additional government support going forward.

Now would be a good time to run those specials through your parts and service departments. Crop farmers especially need to maintain the trucks they have until conditions improve. Any way you can help them achieve that objective would be greatly appreciated. Then when they are ready to make that next purchase, they will remember those who helped them through the less profitable times.