WASHINGTON, Jan. 27, 2016 - Congressional budget analysts have sharply increased their estimate of how much the new Agriculture Risk Coverage program will cost in the wake of a heavier-than-expected signup.
The ARC county option is now expected to pay out $6.1 billion in fiscal 2017 and $5.2 billion in 2018, compared with $1.6 billion and $1.9 billion, respectively, for the Price Loss Coverage program, according to the Congressional Budget Office.
Last year, CBO estimated that the Agriculture Department would make ARC payments of $3.7 billion and $2.7 billion in 2017 and 2018, versus $2.9 billion and $2.8 billion in PLC payments.
ARC payments are tied to declines in county farm revenue, which accounts for changes in average yields as well as in market prices. Yields aren’t factored into PLC. PLC payments are triggered when market prices fall below a target, or reference price for each covered commodity.
Pat Westhoff, director of the University of Missouri’s Food and Agriculture Policy Research Institute, said the fiscal 2017 estimates could still change significantly since they are based on final prices and yields for the 2015-16 marketing year. CBO estimates that farmers will receive $4.1 billion in ARC payments on corn in fiscal 2017 and $1.4 billion on soybeans.
A year ago, CBO estimated that 60 percent of corn acreage would be enrolled in the ARC program during the life of the 2014 farm bill. The actual share is 93.4 percent.
The biggest share of PLC payments in fiscal 2017 will go to peanuts - some $622 million. But due to slumping wheat prices, PLC payments on wheat acreage are expected to total $471 million in 2017 and top peanuts in 2018 at $775 million.
Food stamp rolls continue to decline slowly. CBO estimates that the cost of the Supplemental Nutrition Assistance Program will be slightly lower in fiscal 2016 at $75 billion, down from $76 billion in 2015, with 45 million people receiving benefits this year. As of October, the latest month for which data are available, 45.4 million people were enrolled in SNAP, down from 46.5 million a year earlier.
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