Farm Bill Safety Net Update
The 2018 Farm Bill was passed and signed into law in December 2018, but the programs under the new farm bill have been slowly rolling out over the course of 2019. Coupled with on-going support from 2014 Farm Bill programs and ad hoc support for trade assistance and agricultural disaster assistance, the safey net for producers is increasingly complex. Some details provide more information for producer to analyze and make sound risk management decisions.
2014 Farm Bill Programs
The ARC and PLC programs under the 2014 Farm Bill continue to be the basis of support for the 2018 crop to be paid in October 2019. Estimates of the 2018 crop Agricultural Risk Coverage - County Level (ARC-CO) program payments by county, crop, and practice are available as of August 2018. Final numbers, including official yields for ARC-CO calculations will be released in October when payments are announced. For current estimates, follow this link to 2018 ARC-CO Estimates. For reference to final payment rates from previous years, follow the links to 2014, 2015, 2016, and 2017. ARC-CO payment rates in Nebraska can also be viewed in an interactive online map. In summary, payment rates are down under ARC-CO, as lower prices over time have translated into lower guarantees and thus, lower protection and payments. Given actual prices for 2014-2017 and current price estimates for the 2018 crop year shown in Table 1 for major Nebraska crops, ARC-CO payment rates across Nebraska for 2014-2018 are shown in Table 2 based on a simple average of all county and practice combinations for each crop as well as projected yields to date for 2018.
Table 1. Commodity Prices
|* Final price estimates for 2014-2017 from USDA-NASS. Price projections for 2018 from USDA-WAOB and USDA-FSA as of August 2019. Sources: USDA-FSA, USDA-NASS, and USDA-WAOB.|
Table 2. Average ARC-CO Payment Rates in Nebraska
|Commodity||County/Practice Combinations||Average ARC-CO Payment Rates per Base Acre|
|* ARC-CO payments and payment projections averaged across all counties and practices in Nebraska where data is available. Payments for 2014-2017 from USDA-FSA. Payment projections for 2018 based on yield and price projections from USDA-NASS, USDA-WAOB, and USDA-FSA as of August 2019. Sources: USDA-FSA, USDA-NASS, and USDA-WAOB.|
In comparison to ARC-CO, for which payment rates started large and shrunk over time as prices fell and guarantees fell, Price Loss Coverage (PLC) payment rates grew as prices fell below reference rates. Table 3 contains the average PLC payment rates over 2014-2018 for comparison, based on the average PLC program payment yield shown in the table.
Table 3. Average PLC payment rates in Nebraska
|Commodity||Average PLC Payment Yield (bushels/acre)||Average PLC Payment Rates per Base Acre|
|* PLC payments and payment projections based on weighted average PLC payment yields in Nebraska. Payments based on prices for 2014-2017 from USDA-NASS, price projections for 2018 from USDA-WAOB and USDA-FSA as of August 2019. Sources: USDA-FSA, USDA-NASS, and USDA-WAOB.|
2018 Farm Bill Programs
ARC and PLC
While the ARC-CO and PLC programs under the 2014 Farm Bill provide support through the 2018 crop year to be paid in October 2019, the new 2018 Farm Bill provides reauthorization of ARC and PLC, including ARC-IC, the farm-level, or individual coverage ARC program. The new legislation made some relatively modest improvements to both ARC and PLC programs, but perhaps most significantly, provides for a new enrollment decision in 2019, with some details discussed in a new safety net fact sheet. Unlike the last farm bill, where producers had a one-time choice for 2014-2018 protection, they will have a choice now for 2019-2020 and then an annual choice beginning in 2021. Given the results and changing propects for ARC and PLC over the 2014-2018 crop years and the outlook ahead, the new decision could be very important and very different for producers. While ARC and PLC sign-up has begun, it is currently scheduled to run through March 15, giving producer time to study the programs, wait for updated market and production expectations, and carefully analyze farm program choices before the program deadline nears. Nebraska Extension and the USDA Farm Service Agency in Nebraska are gearing up to deliver farm bill education across the state in November and December as further information is available and producers are ready to consider their choices and decisions. Watch for more information on meeting details on https://agecon.unl.edu/ag-public-policy or contact your local Extension office for further information.
Along with crop commodity program updates, dairy support programs were also updated. The existing Margin Protection Program (MPP) for dairy was replaced with the Dairy Margin Coverage (DMC) program. The new program shares common features with the former MPP, but with new margin protection levels, premiums, and volume coverage options for producers. A fact sheet written by Robert Tigner provides a good discussion of the program for which sign-up is on-going. The 2019 deadline for sign-up ends on September 20, so the deadline is near for producers wishing to enroll for 2019 or for the full 2019-2023 period and be eligible for the premium discount.
In addition to farm bill programs and supports, the Secretary of Agriculture announced a second round of ad hoc trade assistance to help cover 2019 commodity losses due to continuing trade conflicts and export market losses. The 2019 trade assistance mirrors the 2018 assistance of direct payments to producers, purchases of selected commodities for food distribution programs, and additonal funding for USDA-supported ag trade promotion efforts. The direct payments are called Market Facilitation Program (MFP) payments and are slated for various trade-affected commodities, including numerous field crops, some specialty crops, and dairy and pork. The 2018 trade assistance was calculated on a commodity-by-commodity basis and then paid on 2018 production or inventory. The 2019 trade assistance was similarly calculated on a commodity-by-commodity basis, but then pooled at the county level to determine a flat payment rate per planted acre for each county. These payment rate were announced in late July by county, along with a commitmetn of $15 per acre for prevented planting acres and payments of $11 per head of inventory and $0.20 per hundredweight of milk production for pork and dairy producers.
The MFP payment rates vary from $15 per acre to $74 per acre across Nebraska, as shown in an online map and briefly discussed in the safety net fact sheet . Sign-up is underway now through December 6. The first installment of MFP payments equal to 50% of the announced payment rate or $15 per acre, whichever is more are due as soon as sign-up is complete. A second and potential third installment in late 2019 and early 2020 could be added if trade conflicts and market losses continue.
Agricultural Disaster Assistance
The final part of the safety net for producers are the moment is the portfolio of agricultural disaster assistance programs. There are several disaster assistance programs that were authorized and funded through previous farm bill legislation, including the Livestock Indemnity Program (LIP), the Livestock Forage Disaster Program (LFP), the Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP), and the Tree Assistance Program (TAP). These and other emergency assistance programs such as emergency loans and emergency conservation assistance programs provide ready assistance to producers when disasters occur. USDA's Farm Service Agency has the primary responsiblity of administering this large portfolio of programs.
In addition to the standing ag disaster assistance programs, Congress and the President approved emergency assistance legislation that contained approximately $3 billion of assistance for agricultural losses in 2018 and 2019 due to disaster events. Most, but not all of Nebraska 93 counties were declared disaster counties during this time and producers will be elgible for assistance. In other counties, producers may be able to petition directly to FSA for individual qualifying disaster losses even though the county was largely spared from losses. The disaster assistance will cover crop revenue losses below expectations based on a slide scale, covering losses below 75 - 95% of expected revenue based on the level of crop insurance purchased by the producer. Producers who did not purchase crop insurance will still be covered by disaster assistance, but at the lower 75% end of the scale while those that bought the highest levels of crop insurance will be covered by disaster assistance at the higher 95% end of the scale. The disaster assistance will also provide some support for prevented planting losses as wll as grain losses in inventory due to disaster events, such as flooded grain bins. The Secretary of Agriculture just announced the agricutlural disaster assistance program roll-out earlier today, so some details remain uncertain at present. The safety net fact sheet discusses the program in brief, but more details will be forthcoming.
With remaining support from the 2014 Farm Bill, new programs and decisions under the 2018 Farm Bill, trade assistance, and disaster assistance, producers have a substantial, if complex safety net, not even counting the federal crop insurance program. Understanding the various programs, the details, the expected support, and the way in which programs complement or even compete with each other is a critical part of making sound risk management decisions. Look to Nebraska Extension and the https://agecon.unl.edu/ag-public-policy website for continued updates to information and analysis as it is available.
Posted by Bradley D. Lubben, Monday, September 9, 2019