Comparing farm bills: What producers should be aware of

From the Farm Service Agency

The 2018 Farm Bill amended the 2014 Farm Bill and reauthorized the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs with modifications. The ARC program is an income support program that provides payments when actual crop revenue declines below a specified guarantee level. The PLC program provides payments when the effective price for a covered commodity falls below its effective reference price. Though much of the main structure of the ARC and PLC programs was retained in the 2018 Farm Bill, a few mandatory and discretionary changes were made to ARC and PLC in regulations. The following information covers the changes for the ARC and PLC programs for the 2019 through 2023 crop years.

Treatment of base acres on farms entirely planted to grass, pasture, idle or fallow. The 2014 Farm Bill placed no restrictions on farms planted to grass, pasture, idle or fallow in any year.

In the 2018 Farm Bill, base acres on farms where all cropland acres have been planted entirely to grass or pasture, including cropland that was idle or fallow, from Jan. 1, 2009, through Dec. 31, 2017, will be maintained; however, no ARC or PLC payments will be issued for those base acres from 2019 through 2023. Identified farms meeting these criteria cannot be combined with another farm in order to circumvent these provisions.  

Election of ARC or PLC. The 2014 Farm Bill required producers to make a one-time unanimous and irrevocable election to obtain PLC or ARC-CO on a covered, commodity-by-commodity basis. An election of ARC-IC applied to all covered commodities on the farm. The election was effective for the 2014 through 2018 crop years.

The 2018 Farm Bill requires a unanimous election to obtain PLC or ARC-CO on a covered commodity-by-commodity basis that will remain in effect for the 2019 through 2023 crop years. An election of ARC-IC in any year will apply to all covered commodities on the farm. Starting with the 2021 crop year, and each crop year thereafter through 2023, the producers on a farm may change the election of PLC or ARC on a year-to-year basis.

ARC-CO payments based on physical location of the farm. The 2014 Farm Bill provided that payment rates for covered commodities with an ARC-CO election were based on the yield data from the administrative county of the farms determined by the Farm Service Agency (FSA).

In the 2018 Farm Bill, beginning with crop year 2019, payments for covered commodities with an ARC-CO election will be based on the yield data of the county where each tract is physically located. ARC-CO revenues will be weighted by base acres from each physically located tract, then summarized to the administrative farm level to determine the payment rate. 

County yield data. The 2014 Farm Bill provided the actual and benchmark ARC –CO per-acre yields that were established using the following data sources, as determined by the secretary: National Agricultural Statistics Service (NASS) county yield; Risk Management Agency (RMA) and other sources determined by the state committee. 

Effective for each of the 2019 through the 2023 crop years, the 2018 Farm Bill stipulated that the actual and benchmark ARC-CO per-acre yields will be established using the following three data sources in the following order of precedence: RMA, NASS and other sources determined by the state committee. 

Yield updates. The 2014 Farm Bill allowed for a one-time opportunity to update farm PLC yields on a covered commodity-by-commodity basis. The updated yield was used in calculating PLC payments for crop years 2014 through 2018 on covered commodities that had elected PLC. 

The 2018 Farm Bill allows producers a one-time opportunity to update farm PLC yields on a covered commodity-by-commodity basis in 2020. The updated yield will be used in calculating PLC payments for crop years 2020 through 2023 for covered commodities that have elected PLC.

Reference price vs. effective reference price. The reference price of wheat is $5.50 per bushel. The effective reference price means the lesser of:

  • An amount equal to 115 percent of the reference price for the applicable covered commodity, or
  • The greater of the reference price of the applicable covered, or 85 percent of the Olympic average of the marketing year average price of the applicable covered commodity for a five-year period prior to the previous crop year.

For PLC, the 2014 Farm Bill made PLC payments to producers when the effective price for the applicable covered commodity was less than the reference price for the covered commodity.

The 2018 Farm Bill will make a PLC payment to producers when the effective price for the applicable covered commodity is less than the effective reference price for the covered commodity.

For ARC, under the 2014 Farm Bill, if the 12-month national average market price for any year in the benchmark calculation is less than the reference price, then the reference price was substituted for the 12-month national average market price for that year.

In the 2018 Farm Bill, if the 12-month national average market price for any year in the benchmark calculation is less than the effective reference price, then the effective reference price will be substituted for the 12-month national average market price for that year.

Determining counties and crops with a separate irrigated and nonirrigated guarantee and actual revenue. The 2014 Farm Bill directed the secretary, to the extent practicable, to calculate a separate actual revenue and guarantee for irrigated and nonirrigated covered commodities. FSA implemented the policy by determining that a county and crop combination must have at least 25 percent of the acreage irrigated and 25 percent of the acreage nonirrigated using FSA planted data for the 2008 through 2013 crop years.

Under the 2018 Farm Bill, the same language was used except that the phrase “to the extent practicable” was removed. FSA policy for determining a county and crop that will have a separate irrigated and nonirrigated guarantee and actual revenue will be based on RMA data. In order to be designated a county with a separate irrigated and nonirrigated guarantee and actual revenue, one of the following items must occur:

  • RMA irrigated and nonirrigated data must be available in three of the five years between the years 2013 and 2017, or
  • Both of the following: FSA irrigated and nonirrigated data must indicate the county had at least 10 percent irrigated and 10 percent nonirrigated in the county between the years 2013 and 2017 and an average of 5,000 acres was planted in the county every year from 2013 through 2017.

FSA will evaluate these counties beginning in 2021.

For more information on FSA programs, eligibility and related information, visit fsa.usda.gov.