Farm bill requires choices
The 2014 Agricultural Act (farm bill) will require farmers and landowners to make a number of choices regarding program options.
"For crop producers, the primary decision will be to choose the Agricultural Risk Coverage (ARC) option or the Price Loss Coverage (PLC) option," says Dwight Aakre, North Dakota State University Extension Service farm management specialist. "Within these primary choices are additional secondary decisions that must be made."
The decision to choose between ARC or PLC must be made for the 2014 crop year.
Failure to make this decision will result in no farm program payments for 2014 because there is no default option for 2014.
For 2015 through 2018, PLC will be the default option, which will give producers and landowners the opportunity to participate in the farm program during those years. However, producers no longer will have the option to enroll in the ARC.
Annual enrollment in the farm program will be required every year, but the choice between ARC and PLC is a onetime-only option for this year.
Choosing ARC or PLC is a choice between revenue protection and price-only protection. With ARC, producers also will choose between county or farm coverage. If county coverage is chosen, producers have the option to make the decision on ARC versus PLC by individual crops.
If the farm option is chosen, there is no option to enroll individual crops in PLC. If a producer elects PLC for one or more crops, he or she may utilize another new program for those crops called the Supplemental Coverage Option (SCO). This is a shallow-loss insurance policy that will be delivered by the insurance industry rather than the Farm Service Agency (FSA). These policies will be countywide coverage, not individual farm coverage. SCO will not be available for crops enrolled in ARC, and these policies will not be available until 2015.
The ARC option is a revenue guarantee program that makes a payment to producers by crop if the producer choses the county option. Payments are made when the actual per-acre revenue for the county falls below the revenue guarantee. This option is like a group insurance plan in which coverage is based on the average yield for the county times the national marketing year price.
ARC covers losses between 76 and 86 percent of the county benchmark revenue.
Losses outside of this 10 percent band are not covered. Lost revenue below 76 percent of the benchmark revenue is not covered because multiperil crop insurance is available to cover those losses.
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