by Ray Bowman
(first published in the October 16, 2014 issue of The Farmer’s Pride)
Some of the combines are still rolling but many farmers are putting grain in the bins. No matter what stage the harvest is at, this is a busy time. It’s not a time you want to start crunching the numbers on next year’s crop insurance.
University of Kentucky extension economist Todd Davis says that’s OK. It’s a little early yet to begin evaluating the the two new risk management programs that became available under the 2014 Farm Bill.
Rather than the direct and countercyclical payments and state-based Average Crop Revenue Enhancement (ACRE) programs that were available under the 2008 Farm Bill, growers will have two new supplemental programs to choose from.
The first is called the Price Loss Coverage (PLC) program, which makes a payment to a producer when the covered crop comes in below a fixed reference price. The Agricultural Risk Coverage (ARC) program kicks in when either the farm’s revenue from all crops or the county’s revenue for a crop falls below 86 percent of a predetermined or benchmark level of revenue. The grower makes the decision which benchmark (individual farm or county) they will be held to. The two program options provide an economic safety net, but at a projected lower cost than the ones they replaced.
Confused yet? Davis says not to worry, help is on the way.
“There are two different tools being developed through funding from the USDA,” says Davis. “Since there’s a one-time opportunity to make these decisions (over the span of the Farm Bill) it’s going to be worthwhile to dig into these decision tools to evaluate what program works best for you.”
One of the on-line tools is being developed by a group headed by Texas A and M University https://usda.afpc.tamu.edu/ and the other comes from a partnership of land-grant universities led by the University of Illinois http://fsa.usapas.com/
“Both of these tools are to help with the Farm Bill decisions,” Davis reiterates.
Training sessions will soon be scheduled to prepare county extension agents to help producers with the use of the tools, Davis says. “The people who are going to be doing the leg work on this will be the agents, helping farmers run these decision tools. We want to help these agents get very comfortable with the decision tools that are out there before the flood gates open and everybody comes knocking at their door.”
Davis says the crop insurance is still being serviced by private sector companies, with the government serving a reinsurance function which hasn’t changed from the previous Farm Bill. “There is going to be more education needed for everybody involved – farmers, crop insurance agents and lenders – just to understand what the new programs are and how they interact, but the basic delivery mechanism has not changed at all.”
Producers have from now through March 31, 2015 to make a decision between the PLC and the ARCwhich will remain in effect for the 2014-2018 crop years.