Commodity prices are down sharply this year for major crops yet wheat and soybeans may not trigger subsidies under the new farm law, says economist Carl Zulauf of Ohio State University in a blog. He says among the eight major crop, “long grain rice is the most likely to receive a payment from the 2014 farm program options, specifically from PLC,” the Price Loss Coverage subsidy, which is based on reference prices. For his analysis, Zulauf used the nationwide yields and farm-gate prices forecast by USDA.
There are above-average chances for payments for barley under PLC, for corn through the Agriculture Revenue Coverage subsidy, and for sorghum under both programs. The payments would be $90 an acre for rice, $41 for corn, $11 for barley, and $15 under ARC and $3 under PLC if crops and prices match USDA estimates, he said. ARC covers shallow losses in crop revenue.
“Unlike past crop counter-cyclical programs, ARC and PLC have a greater likelihood of not making payments,” wrote Zulauf. “Farmers and farm land owners need to adjust their understanding of how farm programs work in the 21st Century as opposed to the 20th Century.” Sign-up for the new farm program is expected this winter. Growers must choose ARC or PLC for the duration of the farm law.