Here's Agriculture Risk Coverage
The Senate Agriculture Committee has released a 2012 farm bill draft that would repeal direct payments, countercyclical payments and the average crop revenue election (ACRE) program.
The bill, if it becomes law, would set up a new Agriculture Risk Coverage, a revenue protection program that gives farmers a one-time choice of coverage at the individual level or the county level, if a county is approved for the program. Payments would be more generous for losses triggered by a county-wide drop in revenue.
The bill to reauthorize farm programs through 2017 keeps nonrecourse marketing loans. But for nearly all commodities, at the same level as in 2008. That's $2.95 a bushel for wheat, $1.95 a bushel for corn, $6.50 a bushel for long grain and medium grain rice and $5 a bushel for soybeans. Rice farmers had been seeking a higher loan rate.
The Average Risk Coverage would apply to each commodity. The coverage would be based off a five-year olympic yield average (tossing out the high and low years) of yields multiplied by the five-year olympic average of national marketing year prices. Yields are either individual or county-wide, depending on the program you choose.
The program takes a bite out of potential payments several ways:
First, the Agriculture Risk Coverage guarantee offered by the farm bill would be 89% of that average benchmark revenue.
The second limit is the payment rate. Each year's crop revenue will be calculated by yields times the mid-season price for that commodity. Payments are made if that revenue falls below the guarantee, but they can't be bigger than 10% of the benchmark revenue.
The third limit is the amount of eligible acres of the covered commodity. If you sign up for county-wide coverage, payments are made on 75% of your acres. If you sign up for the individual level, payments are on 60% of your acres.
In order to be eligible for Average Risk Coverage payments, a producer must agree to meet conservation requirements set by the Secretary of Agriculture.
This and the rest of the farm bill released Friday can be amended when the agriculture committee considers the bill next week.