Thursday, March 13, 2014

MU Extension Specialist Offers Simplified Explanation of New Farm Bill

Contact: Mark W. Jenner, agriculture business specialist
Headquartered at Bates County Extension Center
Tel: (660) 679-4167

BUTLER, Mo. – United States farmers have a new farm bill that was signed into law last month.  Farm bills have been part of our national heritage since the depression in the 1930’s according to Mark Jenner, an agriculture business specialist with University of Missouri Extension.

“For the last 80 years, farmers, food consumers, and the U.S. government have been experimenting and adjusting our food security safety net.  This idea of ‘experimenting’ is important to note because there are some big changes with the Agricultural Act of 2014,” said Jenner.

The biggest changes, according to Jenner, are the end of direct payments to farmers and an increasing reliance on crop insurance to provide protection from the unexpected.

The ink is still drying on the new law as the implementation regulations are being written.  This is a big undertaking, and USDA will be pressed to get it all done by the 2015 cropping season.

“There is still a lot that is unknown with this new legislation, but we can review the parts that we do know,” said Jenner.

In the new farm bill there are three commodity program choices available to farmers in the Commodity Title: One counter-cyclical program and two revenue-based programs.  The new law requires a farmer to pick a single program and stay with it for five years.

“The new counter-cyclical program is now called the Price Loss Coverage program or the PLC.  The support target prices are set much higher than they have been in the past.  This means that program payments will kick in much sooner than the prices we have been used to,” said Jenner.

There are also two revenue-based program options within the Agriculture Risk Coverage program or the ARC.  The Agriculture Risk Coverage program is based on five years of historical revenues that include both crop yield and price information.  The ARC program is offered at both the county and an individual farm level.  These are two very different options.

The county level option is based on yields and prices for the entire county, and not on one’s own farm revenue history.  The other revenue-based option, the individual ARC is based the yields and prices from your own operation.

“There seems to be a large policy penalty for selecting the individual farm option. When a program payment kicks in, only 65% of the historical revenue is covered under the individual ARC.  The county-level ARC covers a larger, 86% of historical revenue,” said Jenner.

Base acres are another variable in the new farm bill.  Program participants have the opportunity to update their program base acres, or not update them.  In the time since the county base acreage values have been last updated, individual commodity acres within a county have increased or decreased depending on the commodity in question.

According to Jenner, this local acreage change will play a role in whether a participant wants to update their base acres or not.

“Both the PLC and the ARC cover 85% of the historical acres.  A separate, supplemental insurance program is available for the balance of the 15% of the acreage not covered. This program is called the Supplemental Coverage Option, but this option is only available for the Price Loss Coverage program,” said Jenner.

Now that the legislation has become law, the USDA has many rules to write.  They have prioritized all the programs that need attention, focusing on the most financially-critical and time-sensitive rules first.

USDA already has the rules in place for providing disaster assistance for the previous years that have not yet been funded in 2012 and 2013. USDA has set a goal to begin the signup for disaster relief for these previous years by April 15, 2014.

“The news for the Conservation Title is that the funding has been reduced and the total acreage in the program will decline over the next few years to levels about three quarters of our current program levels,” said Jenner.

The Crop Insurance Title of the new farm bill has double-the-funding of the Commodity Title.  Crop insurance is clearly the workhorse of the new farm safety net.  Since these programs will not be implemented until next year, new crop insurance programs will be covered at a later date.  The federal crop insurance program in the new farm bill will still be tied to conservation compliance.  This means individual conservation plans will need to be current.

“The evolution of this farm bill has been several difficult years in the making, but it is now on the books and this new experiment in farm and food security is off and running. For now, pay attention to the current crop insurance program that best suits your needs, and also pay attention to the April 15 livestock disaster relief signup,” said Jenner.

For 100 years, MU Extension has engaged Missourians in relevant programs based on University of Missouri research. The year 2014 marks the centennial of the Smith-Lever Act, which formalized the Cooperative Agricultural Extension Service, a national network whose purpose is to extend university-based knowledge beyond the campus.

University of Missouri Extension programs focus on the high-priority needs of Missourians. Each county extension center, with oversight by locally elected and appointed citizens, is your local link to practical education on almost anything. More information on this topic is available online at


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