The Politics of Agriculture and Understanding the New Farm Bill Programs
Jeff Harrison and Trevor White of lobbying firm Combest, Sell & Associates recently spoke to area farmers at an event co-hosted by Citizens National Bank and Williamson Insurance. Harrison had previously been lead counsel for the 2002 Farm Bill and White is an economist. The topic was the 2014 Farm Bill.
Harrison discussed the changes in Washington since the November elections. Despite some fundamental differences in belief, he does feel some headway will be made in regards to addressing the Highway Fund shortage and that a budget may be passed by Congress for the first time in a long time. The Affordable Care Act will continue to be a focus on both sides of the aisle, with Democrats defending it and Republicans looking to chip away pieces of it to make it easier for businesses to afford. He is hopeful that tax extenders will be put into place, such as the section 179 deduction, which would allow for higher amounts of equipment purchases to be deducted. The House and Senate Ag Committees will need to address several issues this year including school lunch requirements, the Grain Standards Act and Country of Origin Labels required by the World Trade Organization. However, he feels their biggest concern will be defending crop insurance subsidies and not limiting payments for those with more than $250,000 in income as has been proposed by some opposing economists as a means to cut the budget. Harrison encourages farmers to contact their senators and congressmen to protect farm policy and crop insurance, stating “You (farmers) have a lot of power.”
Trevor White spoke specifically about the Agricultural Act of 2014, otherwise known as the Farm Bill. He stated there were 3 programs (direct payments, counter-cyclical program & ACRE) that were repealed as part of this bill and 2 programs that took their place. These programs are Price Loss Coverage, known as PLC and Agricultural Risk Coverage, known as ARC. PLC is a price-based program and allows for the purchase of Supplemental Coverage in addition for added price protection. ARC is a revenue-based program and can be based either on the county’s average yields or an individual farm’s average yields. He notes you are able to choose different options by commodity and by farm, so one size does not necessarily fit all for your entire operation. While he admits making the decision which option to choose can be confusing, he says multiple options are available to address different types of risks and recommends a couple different websites which offer decisioning tools to help you; Texas A&M’s and the University of Illinois’s.
New this year is the option to choose to update your own farm yields, your base allocation of crops or both. This has not been allowed since 2002. The yield is based on your records or plugs 75% of your county average in for years 2008-2012. If you choose to reallocate your base it uses a 4 year average of what you have actually planted and compares it to your total acreage farmed to determine a percentage base of that crop. White notes you will want to review this carefully though, because if you have a lot of base in a crop that is predicted for higher yields, you may want to leave your allocation the same. The deadline to update your yield or reallocate your base acres is February 27, 2015.
Comparing price coverage of the old programs to the new ones, White feels farmers are better protected now than with the direct payments system. He does caution farmers not to bank on a maximum payment however when determining which coverage to choose. “If you get a higher yield than expected, you may not qualify for the maximum payment, even with lower prices.” He also notes the owner of the farm is the one who must make the decision whether or not to update yields or make base reallocations, but it is the producer that decides whether to choose PLC or ARC. The decision of which coverage to enroll in will be in effect until 2018. He encourages farmers to not rely on hearsay or to just copy what other area farmers are doing, “Do your own research. It’s your farm,” he emphasizes. To help you get started, the Farm Service Agency, FSA, has created a timeline of the 4 steps to enrollment in either program by the March 31, 2015 deadline. Visit their website to learn more.