Direct payments are again repealed under this bill.
Cotton producers would however receive a reduced “transition payment” for the 2014 crop and even smaller payments for the 2015 crop in counties unable to participate in STAX.
Farmers will have a one-time irrevocable decision between either Price Loss Coverage (PLC) or county Agricultural Risk Coverage (ARC) on a crop-by-crop basis.
If no choice is made, the farm defaults to PLC. All producers on a farm must make the same election or face potential loss of payments for the 2014 crop. It is also important to note that payments for both PLC and ARC will be made on the following crop year (Example: 2014 payments will be issued in 2015, 2015 payments in 2016 etc.).
The new bill also creates a new revenue program known as Agricultural Risk Coverage (ARC).
This new revenue program would be available to farmers at both the county and individual level. At the county level, any payments will be made on 85 percent of base acres – 65 percent if they choose the farm-level option. In general, a payment would be issued when actual crop revenue is below the ARC revenue guarantee for a crop year. The County level ARC guarantee is 86% of county ARC benchmark revenue. Coverage is capped at 10%, meaning coverage is between 76% and 86% of the county ARC benchmark revenue. County ARC benchmark revenue is based on the Olympic average (removes high and low values) of county yields and U.S. crop year average prices for the 5 preceding crop years. Individual farm ARC would again apply to the whole farm, not commodity by commodity like the county level program.
An updated PLC program is created with updated target prices.
Under the program, a payment would trigger if the U.S. average market price for the crop year is less than the set reference price. Under PLC, any payouts will be made on 85 percent of base acres. Those new reference prices are as follows: wheat, $5.50/bushel; corn, $3.70/bushel; grain sorghum, $3.95/bushel; long grain rice, $14.00/hundredweight (cwt).; medium grain rice, $14.00/cwt.; soybeans, $8.40/bushel; peanuts $535.00/ton, dry peas, $11.00/cwt.; lentils, $19.97/cwt.; small chickpeas, $19.04/cwt.; and large chickpeas, $21.54/cwt.
Payments for commodity programs will be on base acres and not planted acres.
Farmers will have an option to reallocate their base acres for the average of what they planted or was considered planted during 2009-2012. For example, if you had a 100 acre wheat base and planted an average of 50 acres of corn during 2009-2012, you have the option of reducing your wheat base by 50 acres, and establishing a corn base of 50 acres. The reallocation is on a ratio of what was planted or was considered planted during 2009-2012. Farmers can also update their yields under PLC, as payment yields can be updated to 90% of the farm’s average planted yield over the 2008-2012 crop years.
An optional Supplemental Coverage Option (SCO) is available for those taking PLC beginning with 2015 crops not 2014.
SCO provides farms the option to purchase county level insurance that covers part of the deductible under their individual yield and revenue loss policy. Coverage level cannot exceed the difference between 86% and the coverage level in the individual policy. Subsidy rate is 65%. SCO is not available if enrolled in ARC. Under SCO, there are no payment limits.
The conference report has a higher farm program payment limit vs. the 2008 bill.
The new payment caps are set at $125,000 per person and $250,000 for a married couple. The adjusted gross income limits on farm program participation is also increased. Under the 2008 Farm Bill, individuals could receive farm program payments if they had on/off farm income of under $750,000, the new bill increases that to $900,000.
Fruit & Vegetable Limitations
Under the new bill, the limitations on a farmers ability to plant fruit and vegetables on base acres has been modified due to the elimination of the Direct Payment Program. Fruits and vegetables can now be planted on up to 15% of a farm’s base acres without forfeiting PLC or ARC payments. However, plantings in excess of 15% of base acre will not be eligible for PLC or ARC payments.
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