Farm Program Payments and Protection Under ARC and PLC

Earlier this year, Nebraska crop producers and local USDA Farm Service Agency (FSA) offices worked through countless meetings, visits, and analyses to make farm program enrollment decisions regarding base acreage, payment yields, and the election between Agriculture Risk Coverage at the county level (ARC-CO), Agriculture Risk Coverage at the individual level (ARC-IC), or Price Loss Coverage (PLC). The decisions involved deciphering a complex set of farm programs and related crop insurance choices and relied at least in part on producer perceptions of yield and price directions and volatility through the 2018 crop year

An Illustration of Farm Program Decisions and Impacts

When the 2018 Farm Bill was signed last December, producers could look ahead to implementation and the coming decision between enrollment under the Agricultural Risk Coverage (ARC) program or the Price Loss Coverage (PLC) program. While the ARC and PLC programs carried over from the 2014 Farm Bill with relatively modest changes, the substantial drop in market prices and outlook since 2014 pointed toward a widespread shift in enrollment away from ARC and toward PLC due to the increased relevance of the price safety net. However, with this year’s extreme weather events, concerns over crop production, and hopes for improved trade prospects, there has been some recovery in commodity prices, at least as reflected in the October supply and demand reports from USDA. That could affect expected farm program supports or even eliminate them if higher prices were sustained through the marketing year. That in turn could affect producer preferences between the revenue-based support of ARC and the price-based support of PLC by the time the initial enrollment decision is due in March 2020. Commodity Programs The 2018 Farm Bill maintained the existing ARC program at both the county level (ARC-CO) and individual coverage level (ARC-IC) as well as the PLC program that were introduced in the 2014 Farm Bill. In 2014, producers faced a one-time election as to which program to use for the 2014 through 2018 crop years. The new farm bill made some improvements to the ARC program, including changes to the yield data and a trend-yield calculation that should improve the ARC guarantee. There were also modest changes to the PLC program, including a limited yield update and a formula to increase the reference price if market prices increase. However, the biggest feature of the new farm bill for ARC and PLC has to be a new enrollment decision, first in 2019 for 2019 and 2020, and then annually beginning in 2021

Discussion: What Have We Learned from the New Suite of Risk Management Programs of the Food, Conservation, and Energy Act of 2008?

New revenue-based support programs in the 2008 Farm Bill represent a fundamental shift in farm programs and risk management decision-making. However, complexity, uncertainty, economics, and, arguably, an incomplete analysis of the new Average Crop Revenue Election (ACRE) program all contributed to low enrollment in the new program in 2009. An effective analysis of ACRE should consider farm programs as part of an integrated risk management portfolio, including crop insurance, marketing, and other risk management tools as opposed to a separate lottery program. Improving this integration could be one of the most significant consequences of the 2008 Farm Bill.farm bill, commodity programs, risk management, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Farm Management, Land Economics/Use, Political Economy, Public Economics, Risk and Uncertainty, Q18,

Farm Programs, Payments and Prospects

The USDA Farm Service Agency (FSA) began issuing payments to producers in October for Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs for the 2017 crop year. While these farm program payments had provided substantial cash flow to help buffer falling market price and farm income projections in the past three years, the current programs will provide relatively little cash flow for now and for the coming year. Only the ad hoc trade assistance payments and the outlook for new farm programs and decisions in 2019 may provide potential relief from the current outlook

North Central Extension Risk Management Education Center

Managing through the current economic challenges and accumulating shocks in ag sector will be a major challenge for farmers and ranchers. Educating producers to manage these risks and position their farm or ranch for future growth and success is the fundamental purpose of the Extension Risk Management Education (ERME) program

Analyzing Crop Revenue Safety Net Program Alternatives and Impacts on Producers and Program Costs

This study evaluates the policy effects of alternative program designs for federal revenue-based farm income safety net programs. Eight representative farms across Nebraska are used to stochastically simulate the financial impact of changing the current farm crop revenue-based safety net with a state revenue trigger against potential alternative programs involving guarantees at the district, county, or farm level. Results indicate that decreasing the aggregation of the revenue guarantee increases expected farm-level payments and program costs for the revenue-based safety net.agricultural policy, farm bill, farm programs, government payments, representative farms, risk management, simulation, Agricultural and Food Policy, Farm Management, Risk and Uncertainty, Q12, Q18,

Regional Minimums in the U.S. Beef Complex

This report shows how the currently proposed policies differ; shows how these policies have aligned with historical market behavior; provides alternative specifications to regional minimums; and suggests policy alternatives to regional minimums. The main purpose of this report is to show how current and potential alternative specifications of regional minimums would have historically aligned with observed market behavior. However, the fundamental question in the debate of the validity and effectiveness of regional minimums first rests on whether robust price discovery has historically occurred over time and within each USDA-AMS region. If there has been a lack of price discovery during certain times of the year or systematically within certain regions, then creating regional minimums is one alternative to increase negotiated trade to robust levels. Thus, if either of these two conditions are met, then one should not expect any formulation of regional minimums to match historical market behavior. This does not necessarily imply regional minimums are poorly constructed or would be ineffective at increasing price discovery. On the contrary, to create regional minimums so that they matched historical market behavior considering either of these two conditions would be counterproductive to the objective of increasing negotiated trade to a robust level. Rather than solving issues of price discovery, the enacted regional minimums would only continue permitting deficient levels of price discovery to persist under the guise of “improved price discovery.

Updating the Farm Bill Safety Net in an Expanding Sea of Risk

Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, H10,

Precision Agriculture Usage and Big Agriculture Data

Agricultural producers have quickly adopted precision agriculture technologies in recent years. With the availability of global positioning system (GPS) signals and other technology, producers can track yields, steer and control equipment, monitor field conditions, and manage inputs at very precise levels across a field, offering the potential to substantially increase productivity and profitability

Precision Agriculture Usage and Big Agriculture Data

Agricultural producers have quickly adopted precision agriculture technologies in recent years. With the availability of global positioning system (GPS) signals and other technology, producers can track yields, steer and control equipment, monitor field conditions, and manage inputs at very precise levels across a field, offering the potential to substantially increase productivity and profitability