WASHINGTON, Sept. 25, 2014 – U.S. Department of
Agriculture (USDA) Secretary Tom Vilsack unveiled new programs and online tools
to help farmers in the complex decision-making process that growers will face
in the coming year.
The new programs, Agricultural Risk Coverage (ARC)
and Price Loss Coverage (PLC), along with the Supplemental Coverage Option
(SCO) are key farm safety net programs in the 2014 Farm Bill. These new options
represent a dramatic shift from direct payments which were made to producers
regardless of commodity prices and widely criticized during the farm bill
debate.
But these new safety net programs are much more
complicated and producers will not have the option of switching in and out of
them as crop prices or conditions change. Instead, producers will have through
a yet-to-be-determined date in 2015 to select which program works best for each
individual farm and that decision will apply to the 2014-2018 crop years. If no
option is selected, producers will automatically be enrolled in the PLC
program.
“With crop prices coming down, these prices may well
determine producers’ profitability in the future,” Vilsack emphasized. Payments
for the 2014 crop year will not be made until October 2015.
"Farming is one of the riskiest businesses in
the world. These new programs help ensure that risk can be effectively managed
so that families don't lose farms that have been passed down through
generations because of events beyond their control. But unlike the old direct
payment program, which paid farmers in good years and bad, these new
initiatives are based on market forces and include county – and individual –
coverage options. These reforms provide a much more rational approach to
helping farmers manage risk."
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To help farmers choose between ARC (at the county or
individual farm level) and PLC, USDA helped create online tools that allow
farmers to enter information about their operation and see projections about
what each program will mean for them under possible future scenarios. The tools
were developed from distinctly different regions of the country and represent a
wealth of data that could be used in decision-making for each farm.
For example, the ARC county level program makes
payments when county revenue falls between 76% and 86% of the county's
benchmark revenue. The benchmark revenue is based on a 5-year Olympic moving
average (removes high and low values) of county yield and U.S. crop year price.
The PLC program makes payments when the U.S. crop
year average price is less than the crop's reference
price. The reference price is specified by Congress in the
2014 farm bill and for example, is set at $8.40/bushel for soybeans,
$5.50/bushel for wheat, and $3.70 per bushel for corn.
For example, the online tools enable a producer to
look at a sample farm or enter data from his or her individual farming
operation to see the options for ARC at the county level versus PLC coupled
with SCO. Of course, producers will also want to consider how these options
work in conjunction with crop insurance purchases.
The new tools, along with a lot of helpful
background information, are now available at www.fsa.usda.gov/arc-plc.
To reach the Texas A & M group model, click: http://usda.afpc.tamu.edu/
To go directly to the University of Illinois group model, click: farmbilltoolbox.farmdoc.illinois.edu or fsa.usapas.com
Vilsack pointed out that there can be significant
differences under various scenarios.
“In some cases tens of thousands or hundreds of
thousands of dollars,” could be in the balance, “depending on commodity prices
over the next few years,” the Secretary added.
USDA provided $3 million to the Food and
Agricultural Policy Research Institute (FAPRI) at the University of Missouri
and the Agricultural and Food Policy Center (AFPC) at Texas A&M (co-leads
for the National Association of Agricultural and Food Policy), along with the
University of Illinois (lead for the National Coalition for Producer Education)
to develop the new programs.
“We’re committed to giving farmers as much
information as we can so they can make an informed decision between these
programs,” said Vilsack. “These resources will help farm owners and producers
boil the information down, understand what their options are, and ultimately
make the best decision on which choice is right for them. We are very grateful
to our partners for their phenomenal work in developing these new tools within
a very short time frame.”
The first step starts with a decision regarding
reallocating base and yields on each farm.
Starting Monday, Sept. 29, 2014, farm owners may
begin visiting their local Farm Service Agency (FSA) offices if they want to
update their yield history and/or reallocate base acres.
Earlier this summer, FSA sent farm owners and
producers letters asking them to analyze their crop planting history in order
to decide whether to keep their base acres or reallocate them according to
recent plantings.
The next steps will require producers to look at
their options via these new online tools, talk to extension and university
educators and crop insurance agents, and then make their best estimate on
whether or not commodity prices will continue at about the same level, increase
or decrease.
For now, there is no definitive end date for signup
because Vilsack says he wants to give producers plenty of time to explore the
various options and allow time to see what creeps up on “issues of technology”
or any “unanticipated questions.”
“There is no one answer here. It’s a very much farm-by-farm
decision and producers should wait until they are confident with their
decision,” he told reporters during a press call today.
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