The government plans to pro-rate subsidy payments for 2014, 2015 and 2016 grain and soybean crops, says economist Art Barnaby of Kansas State U at the Ag Manager website. There has been no announcement by the USDA, notes Barnaby, but based on information from the department’s state headquarters in Kansas, “it appears to me the decision is final.” The cuts, which reflect budgetary sequestration targets, would be 7.3 percent for fiscal 2014 and 2015 and 6.8 percent for fiscal 2016. “Also, the sequestered cut will be applied after the payment limit. If they didn’t apply the cut until after the payment limit is applied, then big farmers would take no reduction.”
While payments would be pro-rated under the new Agricultural Risk Coverage and Price Loss Coverage programs, there would be no change in crop insurance or Conservation Reserve provisions. Barnaby said with crop subsidies being hit by sequestration, growers may want to adjust crop insurance coverage.
“USDA officials reiterated they are waiting for the White House to make the call in the coming weeks regarding the actual percentage of the ARC-PLC cut,” said DTN, referring to the question of which sequestration rate to use. The deadline to enroll for ARC or PLC is Sept. 30. “The year and timeline for payments is confusing because payments for the 2014 harvested crop and 2014-15 marketing year are considered as part of federal fiscal year 2014, yet payments will go out after the beginning of fiscal year 2016, which starts Oct. 1.”