A closer look at the new farm bill
Cotton growers are not eligible for the ARC or PLC. A special insurance program was developed for cotton to try to bring our cotton program into compliance with WTO trade rules. The cotton insurance program—called Stacked Income Protection Plan (STAX)—will be developed in time for the 2015 crop year and cotton growers will receive modified transition payments this year and next year. Premiums for STAX will be subsidized at the 80 percent level.
The dairy support programs and the Milk Income Loss Contract (MILC) will be replaced with a new margin insurance program. A producer can elect coverage for between $4 and $8 margin between the milk price and the feed cost. There is no premium for coverage at the $4 level, but producers can buy and pay for coverage up to $8 or between 25 percent and 90 percent of their production history. USDA will buy up dairy products and donate them to food assistance programs when milk production is excessive and margins are squeezed.
The cap on the Conservation Reserve Program is set at 27.5 million acres in fiscal 2014 (current enrollment is 25.6 million acres, and contracts covering nearly 2 million acres expire in September). The cap falls to 26 million acres in fiscal 2015, to 25 million acres in fiscal 2016 and to 24 million acres in 2017 and 2018.
The new farm bill limits total commodity support program payments to $125,000 per individual or $250,000 per couple. There is no cap on the individual payments such as the ARC or PLC programs. Crop insurance payments are not subject to the payment limit.
In total, the farm bill is projected to cost $956.4 billion over 10 years. About 80 percent of the cost of the program is for nutrition programs, especially the Supplemental Nutrition Assistance Program (SNAP). Changes to the nutrition title are estimated to save about $8 billion over 10 years, compared to what costs would have been without changes.
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- Ag markets proved quite mixed again Friday morning
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