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USDA Issues First Farm Safety Net Payments

Farm program checks totaling nearly $4 billion could start arriving as early as Tuesday in farmers' bank accounts across the country, providing a much needed boost while many commodity prices are falling. However, many of those who signed up for the new farm bill programs will find themselves empty-handed in this first round of payments.

The U.S. Department of Agriculture (USDA) announced today that nearly one half of the 1.7 million farms that signed up for either the Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) programs will receive safety-net payments for the 2014 crop year.

"Unlike the old direct payments program, which paid farmers in good years and bad, the 2014 Farm Bill authorized a new safety net that protects producers only when market forces or adverse weather cause unexpected drops in crop prices or revenues," Agriculture Secretary Tom Vilsack said in a release.

"For example, the corn price for 2014 is 30% below the historical benchmark price used by the ARC-County program, and revenues of the farms participating in the ARC-County program are down by about $20 billion from the benchmark during the same period. The nearly $4 billion provided today by the ARC and PLC safety-net programs will give assistance to producers where revenues dropped below normal."

Payments have also been reduced by 6.8%, due to the Budget Control Act (sequestration) that Congress passed in 2011. USDA expects ARC/PLC payments to total about $5 billion once all of the payments have been made for the 2014 crop year, Farm Service Agency Administrator Val Dolcini says.

Nationwide, 96% of soybean farms, 91% of corn farms, and 66% of wheat farms elected the ARC-County coverage option; 99% of long grain rice and peanut farms, and 94% of medium grain rice farms elected the PLC option. Overall, 76% of participating farm acres are protected by ARC-County, 23% by PLC, and 1% by ARC-Individual.

“Today's announcement represents “a culmination of a 12-month effort to educate not only our customers but also our employees on a brand-new Title One program,” says Dolcini. “We think it's a great part of USDA's safety net for farmers who have seen both market downturns and revenue and price losses over the course of the 2014 crop year.”

However, producers may find that payments differ substantially “from area to area, crop to crop,” Brad Lubben, Nebraska Extension public policy specialist, noted in a recent video.

“The ARC program is not the ACRE (Average Crop Revenue Election) program that it succeeded. ACRE was this state-level guarantee and if it triggered, everyone (within a state) would get a payment.

“ARC was designed at the county level — in part because producers wanted a more responsive safety net. It's county by county, and it's irrigated and nonirrigated, practice by practice, in counties with enough acres of both.

“That means that, across county lines, some counties are slated for better than $80 for acre payments, while next door there may be $20 or $30 payments … because yield differences translate into revenue differences and payment differences.”

Crops receiving assistance include barley, corn, grain sorghum, lentils, oats, peanuts, dry peas, soybeans, and wheat under ARC-County and PLC. In the upcoming months, disbursements will be made for other crops after marketing year-average prices are published by USDA's National Agricultural Statistics Service.

Any disbursements to participants in ARC-County or PLC for long- and medium-grain rice (except for temperate Japonica rice) will occur in November, for remaining oilseeds and also chickpeas in December, and temperate Japonica rice in early February 2016. ARC-individual payments will begin in November. Upland cotton is no longer a covered commodity.

For data about other crops, as well as state-by-state program election results, final PLC price and payment data, and other program information including frequently asked questions, visit www.fsa.usda.gov/arc-plc. The Agriculture Risk Coverage and Price Loss Coverage programs were made possible by the 2014 farm bill. For more information, visit usda.gov/farmbill.

Written by Sara Wyant for Agri-Pulse Communications, Inc.

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