Farm Bill FAQs: County Agriculture Risk Coverage Program
Jan. 27, 2015
Over the past few months, the Nebraska Extension Farm Bill Education Team has been on the road talking with producers about the 2014 Farm Bill. This is one of a series of articles clarifying some of the common questions asked at these meetings. This article discusses the County Agriculture Risk Coverage Program (ARC) program, a revenue-based program similar to the ACRE program. Within the ARC program there are two selection options:
- ARC-CO, a county based payment
- ARC-IC, an individual coverage based payment
ARC-CO is a crop-based revenue program. Payments will be made when the average county revenue for a covered commodity is less than the guarantee. Average county revenue is 86% of the value of the five-year Olympic average price multiplied by the five-year Olympic county average yield. Payments will be made on 85% of base acres. Payments made under this program may not exceed 10% of the county benchmark revenue.
Q: What is the deadline to enroll in a commodity program?
A: Current producers on the farm must make a program election by March 31, 2015. If no election is made, the farm will automatically be elected into the Price Loss Coverage (PLC) program, and will not be eligible for 2014 program year payments. Program enrollment for the 2015 and subsequent years will be required, with enrollment deadlines yet to be determined. Note, all farms elected into an ARC program (ARC-CO or ARC-IC) or PLC will require annual program enrollment.
Q: Who makes the decision to enroll in a commodity program?
A: The current producer on the land elects that farm number in the PLC program or the Agriculture Risk Coverage Program (ARC). Current producers are defined as parties with an interest in the cropland, including cropland pasture and alfalfa, on the farm the day the election decision is made. Farmland owners with a cash lease are not considered a current producer for program election. Crop-share landowners are considered current producers. Once the program election decision is made, the farm will need to be enrolled annually.
Q: What crops are eligible for commodity program payments?
A: Barley, canola, corn, crambe, flaxseed, large garbanzo, small garbanzo, grain sorghum, lentils, mustard seed, oats, peanuts, dry peas, rapeseed, long grain rice, medium grain rice, safflower, sesame seed, soybeans, sunflower seed, and wheat.
Q: If I am interested in enrolling in ARC-CO should I update my yields?
A: Updated yields, also called PLC yields, are only used to calculate PLC payments, should a farm elect and enroll in PLC. PLC yields will also be retained for possible use in future farm bills, when the option to update the yield may or may not be available.
Q: If I am interested in enrolling in ARC-CO, should I reallocate my base acres?
A: When deciding whether to reallocate or maintain base acres, the landowner will need to compare both base acre scenarios under each commodity program, ARC-CO, ARC-IC and PLC, for each farm number. Reallocating base acres may not benefit all farm numbers.
Q: How are ARC-CO payments calculated?
A: Payments will be made when the average county revenue for a covered commodity is less than the guarantee. The county revenue guarantee is 86% of the value of the five-year Olympic marketing year average (MYA) price multiplied by the five-year Olympic average yield for the county. Payments will be made on 85% of base acres.
Payments for ARC-CO are calculated when the average county revenue for a covered commodity is less than the county revenue guarantee for that commodity. The county revenue guarantee is 86% of the county benchmark revenue. The county benchmark revenue for a crop is the five-year Olympic marketing year average (MYA) price for the covered commodity multiplied by the five-year Olympic average county yield of the covered commodity. The actual county revenue is the actual average county yield of the covered commodity that year's MYA price. The payment rate for that particular covered commodity is equal to the crop's benchmark guarantee minus the crop's actual revenue, not to exceed 10% of the county benchmark revenue for the crop. A payment for a farm is calculated using 85% of the specific crop base acres on the farm times the payment rate times the producer's share.
Q: How is the marketing year average (MYA) price determined?
A: The marketing year average price, sometimes abbreviated MYA, is the average price received over a crop's 12-month marketing year. The MYA is determined by monthly USDA NASS surveys of approximately 2,000 buyers nationwide, in 31 states, where 90% of sales occur. The marketing year for corn, grain sorghum, and soybeans runs from Sept. 1 through Aug. 31. The marketing year for wheat, oats and barley runs from June 1 through May 31.
Q: What is an Olympic average?
A: An Olympic average is calculated by dropping the high value and low value, then averaging the remaining values.
Q: I have multiple farms. If I enroll one farm number in ARC-CO, do I have to enroll all farm numbers in ARC-CO?
A: No. ARC-CO is elected on a covered-commodity-by-covered-commodity basis for each farm. So, one FSA "farm" could have ARC-CO elected for corn and PLC elected for wheat. A separate FSA "farm" could have ARC-CO elected for wheat and PLC elected for corn.
Q: I have multiple covered commodities on one farm. If I enroll one covered commodity in ARC-CO, do I have to enroll all covered commodities on that farm in ARC-IC?
A: No. If a farm is not elected into the individual Agriculture Risk Coverage (ARC-IC) program, producers will be able to elect county Agriculture Risk Coverage (ARC-CO) or Price Loss Coverage (PLC) on a commodity by commodity basis. ARC-IC is elected on a farm-by-farm basis. One FSA "farm" could be elected into ARC-IC which covers all covered commodities on the farm. A separate FSA "farm" that does not elect ARC-IC could have a combination of ARC-CO and PLC elected on a covered commodity by covered commodity basis for base crops on that farm.
Q: Do I have to plant the covered commodity on the respective base acres in order to receive an ARC-CO payment?
A: No. There is no requirement to plant covered commodities to be eligible for an ARC-CO payment. However, a farm elected and enrolled in ARC-CO must have base acres for the crop that suffers a county-level revenue loss in a particular year.
Q: If I elect in a program now, can I change my mind at a later date?
A: The election decision can be withdrawn and changed at any time during the election period which goes through March 31, 2015. This includes when "current producers" on the farm change before March 31, 2015, and the new current producers want to change the program election. The program election decision on file as of the final date will apply for the 2014-2018 program years.
Q: I am a cash rent landlord who is changing tenants. If the 2014 cash rent tenant makes a decision prior to the end of their lease, can the 2015 cash rent tenant change commodity programs once their lease begins?
A: Yes, once the new tenant becomes the "current producer" on the lease, they may change the program the farm is elected in as long the change is made by the election deadline, March 31, 2015. If the new "current producers" agree with the prior election, they do not need to refile or affirm the prior election.
The decisions to be made in the next few months regarding the farm bill are very complex and will last for the duration of this farm bill. For the latest farm bill information and a schedule of information meetings visit farmbill.unl.edu.Jessica Johnson, Jim Jansen, and Monte Vandeveer
Nebraska Extension Educators