You are here
9 Need-to-Knows From the Farm Bill
Lawmakers love acronyms—FBI, EPA – so the new farm bill has plenty. Here are the biggies for corn, soybean, and wheat farmers:
ARC, or Agriculture Risk Coverage. This is a new revenue program that’s something like a free GRIP insurance at the county level, except that it’s based on a five-year rolling average of national prices and county yields, not one year. This pays on 85% of your base acres. ARC also offers farm-level coverage—for all of your crops lumped together – and on only 65% of your base.
PLC, or price loss coverage. This is the new target price program that pays when national average prices fall below a reference price. Like ARC, it pays on 85% of your base acres planted to a crop, and on your historical yields. You’ll have a chance to update yields — to 90% of the last five-year average.
SCO, or supplemental coverage option. If you sign up for PLC, you’ll have a chance to buy SCO when you buy your regular crop insurance. It’s similar to ARC, except that it’s based only on one year’s revenue, like a GRIP insurance policy. (Sorry about another acronym: it stands for Group Risk Income Protection—and that has a new name, too, ARPI, or Area Risk Protection Insurance.)
OK, enough acronyms. How about some key numbers to remember?
$3.70 a bushel. This is the new “reference price” for corn, up from $2.63 for the old counter-cyclical payment target price. The reference price for soybeans is $8.40 a bushel. For wheat, it’s $5.50. If you pick PLC and prices in the marketing year following harvest fall below the reference price for your crops, you’ll get a payment.
86%-$76% That’s the payment window for ARC. If revenue falls below the benchmark of national average prices and yields (either county or on-farm), it has to fall below 86% of the benchmark to trigger payments. It won’t pay below 76%, so it’s a shallow loss program. Any revenue losses below that would have to come from revenue insurance crop insurance or out of pocket.
Visit your local FSA office: To prepare to get base and yield information on your farms if you don’t remember it. And to prepare for conservation compliance now required for crop insurance. If you’ve been getting direct payments, you’re probably in compliance. If you’re in doubt, ask FSA for your farm records folder to see if any fields on your farm are classified as highly erodible by NRCS.
Check with your land grant university farm management extension staff to see when they will be holding meetings on the new farm bill. And ask about online decision-making tools. Meetings and tools should help you decide: whether or not to re-allocated crop acres in your base, whether or not to update yields, to pick ARC or PLC, and if in PLC, whether to buy SCO or higher levels of revenue crop insurance.
Don’t procrastinate! If you can’t decide between PLC and ARC, USDA will put your farms into PLC. But there’s a penalty: you won’t be in either one during this year, 2014. You’re kicked out of the program, then back in from 2015 through 2018. All of these decisions are for the next five years! (Except buying SCO)
Acronyms and numbers: 9 things you need to know about the farm bill.