Farm Bill’s ag risk coverage options


Tony Nye - OSU Extension



Last week we started discussing the 2018 Farm Bill options Farmers and Farmland owners can be thinking about as it relates to the commodity programs within the Farm Bill.

Last week we discussed PLC options and related information. This week I want to take a look at the Agricultural Risk Coverage (ARC) options, both county and individual.

So what is the Agricultural Risk Coverage – County (ARC-CO) under the 2018 Farm Bill?

The ARC-CO program provides revenue loss coverage at the county level. ARC-CO payments are issued when the actual county crop revenue (current year county yield multiplied by the national marketing year price) of a covered commodity is less than the ARC-CO guarantee (5 year Olympic average county yields multiplied by 5 year Olympic average of the higher of the national marketing year price or the effective price for the covered commodity and the product reduced by 86%).

The 5 year Olympic average has a 1 year lag, Program year 2019 would use the five years of 2013-2017. — Source USDA Farm Service Agency https://www.fsa.usda.gov/programsand-services/arcplc_program/index .

So then what is the Agricultural Risk Coverage – Individual (ARC-IC)?

The individual option of ARC is also a revenue program, but instead of county yields, it is the yields of the individuals’ planted acres that get used to calculate a payment. A weighted payment is made on base acres not planted acres. Another difference from the county version of ARC is that payments are only made on 65% of the farms base acres not 85%.

What is the difference in ARC – IC and ARC – CO?

Both programs are revenue based programs that trigger payments when current year revenue (price times yield) falls below a historical benchmark. ARC-CO uses the county average yields to calculate both current year revenue and historical benchmark whereas ARC- IC uses the farms individual yields to calculate potential payments.

Another big difference in the two programs is that because county yields tend to be less volatile, payments are made on 85% of the farm’s base acres whereas ARC-IC is on 65% of the farm’s base acres.

Additionally, producers who elect ARC-CO have the option to only enroll a portion of their crops in ARC-CO and enroll the others in PLC. If a producer elects ARC-IC- it is for all base acres on the farm and the producer cannot elect PLC for certain commodities.

Another question we have gotten is related to ARC is: What data sources are used to calculate ARC-CO yields and prices?

In the 2018 Farm Bill, Risk Management Agency Yields will be used as the primary source. If a year is missing from the data, set the next level of data is National Agricultural Statistic Service Yields, then the State Average, then the National Average Yield.

Prices are calculated by the Farm Service Agency using Agricultural Marketing Service and National Agricultural Statistics Marketing Year Average (MYA) prices. The MYA are prices calculated by weighting prices throughout the year by the amount of grain sold at that price.

If the MYA price falls below the fixed reference price for a commodity, the reference price is substituted in to the historical benchmark calculation. This is a change from the 2014 Farm Bill where National Agricultural Statistics yield surveys were used as the primary data source for both current year and historical benchmarks.

As mentioned last week, there is a decision tool available to producers which is located at the following website: www.farmoffice.osu.edu. This tool will allow you to evaluate your options whether it is Price Loss Coverage (PLC) or it is Agricultural Risk Coverage (ARC).

Farm Bill meeting set

Don’t forget that Dale Hertlein and myself have a Farm Bill Meeting scheduled for 1-3 p.m. Jan. 7 at the Clinton County Extension Community Room, 111 S. Nelson Ave., Wilmington. This meeting will review changes to the ARC/PLC programs as well as important dates and deadlines.

Additionally, we will look at decision tools and calculators available to help. This information will help you decide which program best fits the needs of your farm under current market conditions and outlook.

In the meantime, be sure to contact Dale Hertlein and his staff in regards to paperwork, filing and other programs. They can be reached at 937-382-2315.

Tony Nye is the state coordinator for the Ohio State University Extension Small Farm Program and has been an OSU Extension Educator for agriculture and natural resources for over 30 years, currently serving Clinton County and the Miami Valley EERA.

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Tony Nye

OSU Extension