After looking at the latest USDA price projections for corn, wheat, and soybeans, and taking into account price patterns for the crops, five university economists say the Price Loss Coverage subsidy is a better choice for growers than the Agricultural Risk Coverage subsidy for corn and wheat grown this year.
Late this summer, growers will get their first chance in years to switch between the Agricultural Risk Coverage and Price Loss Coverage subsidies, Agriculture Secretary Sonny Perdue told lawmakers last week. During testimony at two hearings, Perdue also said the USDA would hold a "general" sign-up for the Conservation Reserve before the end of the year.
The second-largest U.S. farm group says the mammoth tax cut now pending in Congress could force cuts in farm subsidies, or possibly wipe them out, because of "pay-as-you-go" law. "That would be a disastrous trade," said president Roger Johnson of the National Farmers Union, taking a more skeptical view than many farm leaders of the impact of the proposed $1.5 trillion in cuts and associated changes to tax brackets and deductions.
Midwestern farmers could collect an average $50 an acre on corn and soybean land that is eligible for subsidies on this year's crops, says economist Gary Schnitkey of U-Illinois. The payments through the new Agricultural Risk Coverage (ARC) program, intended to shield crop revenue from low prices and poor yields, will be made after Oct. 1, 2016.
Farmers with land in more than one county "are getting a chance to re-assess whether they could collect larger payments" under the new Agricultural Risk Coverage subsidy for their 2014 grain and soybean crops, says DTN. USDA made the change in a letter to county offices last week.
Told to choose between traditional subsidies and a new-era revenue subsidy, corn and soybean farmers overwhelming opted for the revenue plan, the government announced. Growers were expected to choose the Agriculture Risk Coverage plan, analysts said, because it will provide larger payments than traditional subsidies triggered by low prices over the life of the 2014 farm law.
U.S. grain, cotton and soybean farmers will collect an average of $11.2 billion a year in crop subsidies and crop insurance benefits under the 2014 farm law, down by nearly 1 percent from the average of the preceding decade, says a University of Missouri think tank.
Growers have one additional week, until April 7, to select their crop-subsidy program for the life of the 2014 farm law. They must choose between the insurance-like Agricultural Risk Coverage, which shields growers from declines in crop revenue, and the traditional Price Loss Coverage, which guarantees a minimum price. The USDA announced the one-week extension, saying 10 percent of likely farm-program participants had not made a decision as of last week.
More than one-fifrth of farmers have yet to tell the USDA which crop-subsidy plan they want under the 2014 farm law, the insurance-like Agricultural Risk Coverage or the traditionally styled Price Loss Coverage. The deadline for action is Tuesday. Some 77 percent of grain and oilseed growers made the ARC/PLC selection by March 19, says the USDA. "We expect these numbers to continue to increase significantly by the end of the month," said Val Dolcini, head of the Farm Service Agency, during a House Agriculture subcommittee hearing.
Agriculture Secretary Tom Vilsack said he would provide "flexibility" if needed to assure orderly handling of two important farm program deadlines. Growers have until Friday to tell the USDA whether they want to update two factors for calculating crop subsidies - average yields and acreage bases. And they have until March 31 to select either the insurance-like Agricultural Risk Coverage subsidy or the traditionally designed Price Loss Coverage subsidy.
The Senate proposal to place a $50,000 cap on premium subsidies for farmers buying crop insurance "could potentially impact participation" in the program, says Agriculture Secretary Tom Vilsack. The government pays an average of 62 cents of each $1 of premium, although the subsidy rate is as high as 80 percent on some policies. During a tele-conference, Vilsack said, "We don't want to go back to the days of ad hoc (disaster relief) legislation. That could potentially be much more expensive."
Neither the futures market nor the government provide spot-on forecasts of crop prices in the long term, write economists Scott Irwin and Darrel Good at farmdoc daily ahead of the March 31 deadline for grain and soybean farmers to choose a crop subsidy program.
Soybeans will sell for less than $10 a bushel, on average, at the farm gate for three years in a row, projected a University of Missouri think tank, because another large crop is likely to follow this year's record-setting harvest.
Farmers will sell this year's record-setting corn and soybean crops for the lowest season-average price in eight years, the government forecast in a new look at crop output and usage. USDA says the corn and soybean crops are marginally larger than it estimated a month ago. Supplies will be the largest in years, holding down prices for the year ahead.