Pro Farmer Extra
- From the Editors of Pro Farmer newsletter -
April 17, 2014
CBO: PLC payouts to top ARC through 2024
Projected payouts under the Price Loss Coverage (PLC) farm program option are forecast to total $15.915 billion over Fiscal Year (FY) 2016 through 2024; Ag Risk Coverage (ARC) county payments are expected to total $6.299 billion and individual ARC payments are forecast at $4.365 billion, according to updated projections from the Congressional Budget Office (CBO). The projections assume the following percentage of base acres will be enrolled in ARC program options: 40.6% corn, 49.1% soybeans and 27.5% wheat. Those figures are based on updated base acres.
Some of the increase in projected PLC spending may be due to lower ARC participation assumptions. CBO may be anticipating that if prices start to soften, the shallow-loss ARC protection that’s capped at 10% of revenue will look less attractive, as was the case with ACRE in the 2008 Farm Bill.
Spending on ARC and PLC from 2014-2023 was projected to be $27.2 billion when the 2014 Farm Bill passed (relative to the May 2013 CBO baseline). That number has been revised to $24.3 billion. CBO says a significant part of that decrease is due to incorporating its estimates of future sequestration, but that only accounts for about two-thirds of the extra cuts. Participation assumptions and changes in market conditions account for the remainder. CBO sources confirm that at least some of the other reductions came from changes to the supply/demand and price situation plus other “technical” changes. CBO’s cost estimates also signal it is projecting higher average prices than others for most crops in most years.
The biggest CBO projection changes are for the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). The May 2013 CBO baseline showed an estimated $764 billion in spending on SNAP from 2014-2023. The farm bill, which was negotiated under that baseline, claimed to reduce that amount by $8 billion over that time period. Now, CBO has slashed its estimated spending nearly $30 billion for 2014-2023 to $735 billion.
Follow Pro Farmer Editorial Director Chip Flory on Twitter: @ChipFlory
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