Farm Bill Options Confront Crop Producers

Last week, the Indiana Farm Bureau hosted three regional meetings in an effort to give producers a better understanding of new programs included in the 2014 Farm Bill, signed by President Obama on Feb. 7. The northern Indiana meeting, was held last Thursday in Rochester. Around 50 people attended this event at the Fulton County Fairgrounds.

The attendees were mostly from the corn and soybean industry, but a small handful of dairy and wheat producers were present as well.

Farm owners arrived with questions and concerns regarding the new farm bill. The guest speakers, Farm Bureau representatives John Anderson, deputy chief economist, and Matt Erickson, economist, had a few moments for one-on-one time, working closely with concerns and questions before, during and after the presentation. Kyle Cline, IFB's national policy advisor, was on standby to help out with questions as well.

Opening the presentation, Erickson disclosed that this discussion was strictly an interpretation of the Agriculture Act of 2014, more easily known as the farm bill.

"We can interpret the bill however we'd like to, but the USDA (U.S. Department of Agriculture) will always be right in the end, he said."

So, why did this 2014 bill take so long to get passed? Erickson stated, "We have a budget problem in this country." This bill, estimated to cost $956 billion over the next 10 years, will save the United States $16.6 billion. A total of $8 billion of that amount will be taken from nutrition programs.

The main topic of the discussion was the new risk protection programs that will be available. Farmer owners will have the option to choose which commodity program best fits the mold for their needs.

Erickson and Anderson both took turns discussing the differences between the three available programs that will impact crop insurance decisions in 2015: Price Loss Coverage (PLC), Agriculture Risk Coverage —County Level (ARC-C), Agriculture Risk Coverage —Individual Level (ARC-I) and the Supplemental Coverage Option (SCO). Please note that the Supplemental Coverage Option is not available to producers enrolled in the Agriculture Risk Coverage programs.

According to the U.S. Department of Agriculture, "Owners of farms that participate in Price Loss Coverage or Agriculture Risk Coverage programs for the 2014-2018 crops have a one-time opportunity to maintain the farm's 2013 bases through 2018; or reallocate base acres." Basically, this means that producers have the option to sign up for revenue loss or price loss coverage.

Which program is the better choice for locally grown crops between Agriculture Risk Coverage or Price Loss Coverage plus Supplement Coverage Option? Anderson and Erickson said their advice is their own interpretation and it may not necessarily be the right choice for each individual farm owner.

"The Agriculture Risk Coverage-Individual program is encouraged as the program choice for corn and soybean operations and as a toss-up on wheat. The Price Loss Coverage plus Supplemental Coverage Option are (also) a toss-up on wheat," Erickson said.

The reference prices for the opposing Price Loss Coverage program are set at $3.70 a bushel for corn, $8.40 a bushel for soybeans and $5.50 a bushel for wheat. Prices must fall to these numbers before a farm owner will see assistance.

"Agriculture Risk Coverage-County will not make sense for diversified farms," Anderson said. "This option was designed for large Western counties specializing in one crop. An exclusive wheat farmer in Kansas may benefit from this program, but most of us in Indiana may not."

As the discussion turned to new commodity options, Anderson chuckled, "Do you want complicated? Let's talk dairy."

Anderson briefly went over the new Dairy Margin Protection program stating, "This one took weeks and weeks to hash out in Washington."

The Dairy Margin Protection Program will offer dairy producers security when the Actual Dairy Production Margin falls below a producer's individual selected margin coverage level. Actual Dairy Production Margin is figured by the All Milk Price subtracted from the national average cost of feed including corn, soybean meal and alfalfa. Dairy owners can sign up for this program with their Farm Service Agency office. Participating in this program requires an annual $100 fee.