One Method of Calculating MFP
Since I had some spare time this afternoon, I decided to calculate MFP payments for Iowa based upon an estimated average corn and soybean payment. I took the average yields for corn and soybeans for 2014-2017 (I did not have the 2018 data handy) and plugged in estimated rates for corn and soybeans until I got numbers, that on average were very close to the USDA numbers.
Once I plugged in 4 cents for corn and $1.05 for soybeans I got on average of 26 cents difference between USDA and my numbers. The median difference was only $2.
However, there were 7 counties where the final USDA number was at least $10 lower than my calculated numbers. These counties were as follows:
| County | USDA # | My # | Difference | % Difference |
| Allamakee | 40 | 63 | -23 | -57.50% |
| Buchanan | 56 | 66 | -10 | -17.86% |
| Clayton | 50 | 68 | -18 | -36.00% |
| Delaware | 51 | 69 | -18 | -35.29% |
| Dubuque | 43 | 68 | -25 | -58.14% |
| Jackson | 53 | 69 | -16 | -30.19% |
| Winneshiek | 48 | 64 | -16 | -33.33% |
All of the counties listed are in Northeastern Iowa centered around Dubuque, Iowa.
Again, this is simply taking some yield data and multiplying it by a number to arrive at an estimated amount. I looked at the yield data for these counties to see if there was a wide variability in yields between these counties versus others and I did not see anything that jumped out at me.
Another solution to this is if these counties have heavy hog concentrations that are being fed corn and beans right off of the farm. Since hogs are being paid $11 per head, USDA may have adjusted these payments downward to account for the extra payment going to those producers. This is conjecture on my part, but could be a very valid reason for the larger differences. I personally know of several good size hog operations in those counties, but I know there are other large hog operations in other counties that did not have a material difference.
This is just one way to calculating the MFP payments. We may never know the actual way they were calculated but this can guide us on those counties where payments are materially different from other neighboring counties.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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