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2014 Farm Bill Summary: Key Farm Safety Net Provisions

January 31, 2014
Capitol
  

By Carl Zulauf, University of Illinois

This post contains a summary of key farm safety net provisions. Details are minimized to focus on key features. A few brief observations conclude the post. Mistakes are possible given the short turn-around time and interpretation of bill language. Apology is extended for any mistakes.

Title 1. Commodity Programs

Direct payments are repealed except for reduced transition payments to cotton for the 2014 crop and even smaller payments for the 2015 crop under specified, limited conditions.

Programs authorized for the 2014-2018 crop years and through December 31, 2018 for dairy.

A crop farm has a one-time, irrevocable opportunity to elect either Price Loss Coverage (PLC) or county Agricultural Risk Coverage (ARC) on a crop by crop basis. The producer may also elect individual farm ARC, but this election applies to the entire farm. 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.

PLC payments occur if U.S. average market price for the crop year is less than the crop's reference price. Reference prices are: wheat, $5.50/bushel; corn, $3.70/bushel; grain sorghum, $3.95/bushel; barley, $4.95/bushel; oats, $2.40/bushel; long grain rice, $14.00/hundredweight (cwt).; medium grain rice, $14.00/cwt.; soybeans, $8.40/bushel; other oilseeds, $20.15/cwt.; peanuts $535.00/ton; dry peas, $11.00/cwt.; lentils, $19.97/cwt.; small chickpeas, $19.04/cwt.; and large chickpeas, $21.54/cwt.

County ARC payments occur when actual crop revenue is below the ARC revenue guarantee for a crop year. County 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 is a whole farm, not individual crop, program. In essence, it is based on the average covered commodity experience on the farm.

For both PLC and county ARC, payment acres for a crop are 85% of the farm's base acres for the crop plus any generic base acres (former cotton base acres) planted to the crop. Individual ARC payments acres are 65% of the sum of the farm's total base acres and any generic base acres planted to covered crops on the farm.

Total base acres on a farm are the same as current base acres. However a farm can elect to reallocate base acres among the farm's covered crops according to each covered crop's share of the farm's total acres planted to covered crops over the 2009-2012 crop years.

The Secretary of Agriculture is to develop procedures for identifying and eliminating base acres on land that has been subdivided and developed for multiple residential units or non-farming uses and is unlikely to return to agriculture uses.

PLC payment yields can be updated to 90% of the farm's average planted yield over the 2008-2012 crop years.

The 2008 Farm Bill's nonrecourse marketing loan and loan deficiency payment program and associated loan rates are extended, except for modifications to the loan rate for cotton, which now can range between 45 and 52 cents per pound.

The Dairy Product Support and MILC programs are replaced with a Dairy Production Margin Protection Program based on the difference between the price of milk and feed cost of producing milk. A producer elects a coverage level between $4 and $8 per cwt. No premium is paid for the $4 coverage level; premiums are paid for higher coverage levels. Premium schedules are specified for production of 4 million or fewer pounds and for production greater than 4 million pounds. No supply control provision is included.

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RELATED TOPICS: Policy, Crops, 2013 Farm Bill

 
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