On June 1, 2020, the Risk Management Agency issued Product Management Bulletin: PM-20-034 regarding changes to MP for the 2021 and succeeding crop years. https://www.rma.usda.gov/en/Policy-and-Procedure/Bulletins-and-Memos/2020/PM-20-034. RMA states that it uses fertilizer prices posted by the Chicago Mercantile Exchange Group (CME) to establish guarantees and determine indemnities under MP. RMA states the CME has recently discontinued posting swaps prices for Urea (as of January 2020) and Diammonium Phosphate (DAP) (following the March 2020 contract). As a result of the change in available price data, RMA is updating the MP price provisions to utilize futures prices for Urea and DAP.
ANALYSIS – It appears that the changes are prospective on and do not come into effect until the 2021 crop year. Therefore, the contract change date is not an issue since the earliest contract change date is June 30. It appears that the changes are necessary since the current price discovery method for urea and DAP using the CME is no longer effective.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.