How can you make right farm bill program decisions?

How can you make right farm bill program decisions?

Arkansas agriculture economist outlines new programs ARC, PLC, SCO options. Links provided.

Be warned, the new farm bill is “very complex” relative to the one it is replacing.

“Basically, the big difference is the decisions you make now with regard to the (new) farm bill are going to be based on probabilities” said Brad Watkins, a University of Arkansas Division of Agriculture economist. “The old farm bill’s fixed deficiency payments were known each year. Now, things are going to vary from year to year. There is no certainty on what those payments will be -- they’ll be based on what” happened during the cropping season.

Speaking at the 2014 Rice Expo general session on Aug.1, Watkins said the new farm bill will require “a lot of decisions to be made on your part, as producers, to increase the probabilities of receiving what you need.”

What are some of those necessary decisions?

  • Decide whether to reallocate your base acres.

“You’ll get the opportunity to do so based on previous planted history of your crops from 2007 through 2009.”

  • Decide whether to put your crops in the Agricultural Risk Coverage (ARC) or the Price Loss Coverage (PLC).

“The ARC program is a revenue coverage type program. That guarantees revenue based on the county. If the actual revenue for the county falls below the guarantee, then a payment is triggered.

PLC

“The PLC program is similar to the counter-cyclical program we’ve seen in the past. It has a ‘reference’ price similar to the ‘target’ price used before. If the national average price falls below the reference price, you’ll get a payment.”

Those preferring the PLC program will be able to update payment yields. Also, beginning in 2016, producers can opt into the Supplemental Coverage Option (SCO) to provide additional protection.

Added to the mix is a third option for those choosing ARC. Instead of going with a county average you can go with “a whole farm option. If you put one crop in, you have to put them all in. You’re paid based on a guaranteed revenue for the farm.

“So, you have three options. You can put everything in the PLC, all in the ARC, or a combination of both.  

  • Figure out your expectation for prices over the new farm bill’s life.

“How prices go up or down will impact what the payments will be in each of the programs.”

Anticipating producers’ need for assistance with program sign-up, Watkins nodded towards several Web-based tools in development. “These will be available in the near future. One is being jointly developed by the Agriculture and Food Policy Center (at Texas A&M University) and the Food and Agricultural Policy Research Institute (FAPRI at the University of Missouri). Another is being developed by the University of Illinois. So, there will be help for you before putting all your eggs in the basket.”

The University of Arkansas, said Watkins, will align with the Texas A&M/FAPRI product. “We have a good working relationship with Texas A&M. … Their (farm bill) decision aide will be fairly comprehensive. So, we’ll be using that in Extension to help you make your decisions.

“When I say ‘comprehensive’ it will help you with yield updates, base reallocation, PLC or ARC, crop insurance components, (and other things).”

For more information, Watkins pointed producers to a site dedicated to the 2014 farm bill.

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