Economic Tidbits

Farm Program Decisions on the Horizon

Farmers have until March 16 to elect which farm programs will cover their 2019 and 2020 crops under the 2018 farm bill. The Agriculture Risk Coverage (ARC) and the Price Loss Coverage (PLC) programs fundamentally remain the same under the 2018 bill. However, the changes which were made, along with market fluctuations, necessitate that farmers take a fresh look at the programs for this sign-up.

Farmers can enroll on a commodity-by-commodity basis in either ARC-County Option or PLC. Or, they may enroll all covered commodities in ARC-Individual Coverage. Those choosing to enroll commodities in PLC may also purchase additional shallow loss coverage through the Risk Management Agency’s Supplemental Coverage Option (SCO) program. Nebraska-produced commodities covered under the programs include corn, soybeans, grain sorghum, and wheat along with several other minor crops.

Several entities have assembled information to help farmers make informed decisions. Nebraska Farm Bureau prepared a Top Ten Things to Remember document which lists changes and items producers should contemplate when examining program alternatives. The document can be found here. The Department of Agricultural Economics at the University of Nebraska-Lincoln has published video resources on farm bill details and decisions for producers. The two presentations are available at go.unl.edu/farmbillvideo. The recorded presentations are led by Brad Lubben, associate professor in the Department of Agricultural Economics, and Cathy Anderson, chief specialist of production and compliance programs with the USDA Farm Service Agency in Nebraska.

There are also web-based decision-making tools available to farmers. These include the Gardner-farmdoc Payment Calculator, a University of Illinois tool that offers farmers the ability to run payment estimate modeling for their farms and counties for ARC-County and PLC. And, the ARC and PLC Decision Tool, Texas A&M’s user-friendly tool that allows producers to analyze payment yield updates and expected payments for 2019 and 2020. Producers should always consult with their local FSA office, local banker, or crop insurance agent before making any farm program decisions.

This year’s sign-up offers farmers the opportunity to hit the reset button on which farm program best fits their needs. The reality for the foreseeable future is that farm program payments will likely be less than in the past decade. And, with the Phase 1 trade agreement with China and passage of a new trade agreement with Canada and Mexico, its less likely MFP payments will continue beyond the third tranche of the 2019 program which was distributed earlier this month. Barring any surprises, any income gains for farmers and ranchers will need to come from the markets.  

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