For the first time since the 2014 farm bill was implemented, the USDA is giving farmers the option of changing enrollment between the insurance-like Agriculture Risk Coverage and the traditionally designed Price Loss Coverage subsidies.
Roughly 16 months ago, at their first hearing for the 2018 farm bill, Senate Agriculture chairman Pat Roberts and Sen. Debbie Stabenow agreed to write a bipartisan bill that would be enacted on time, a seemingly simple goal that has eluded Congress repeatedly. With a committee vote set for Wednesday on their 1,006-page bill, the two committee leaders say they are on the verge of a major bipartisan victory.
With the start of the new fiscal year, the USDA will issue $8 billion in crop subsidy payments, triggered by persistently low commodity prices, to hundreds of thousands of farmers. The government also said it will pay $1.6 billion in annual rental payments to landowners who enrolled fragile land in the Conservation Reserve.
Corn, soybean and wheat growers would receive significant payments — as high as $80 an acre for corn — under the insurance-like Agriculture Risk Coverage subsidy based on the low commodity prices now forecast, says Ohio State economist Carl Zulauf.
Agriculture Secretary Tom Vilsack said he is looking at every factor, including trade rules and budgetary effects, in the cotton industry's request that he declare cottonseed oil eligible for the same subsidies offered to grains and soybeans.
Grain and oilseed growers will receive $4 billion in crop subsides due to low market prices for their 2014 crops, said the USDA. Payments are being sent to about half of the 1.7 million farmers who enrolled in the new Agriculture Risk Coverage program, intended to shield crop revenue from low prices and poor yields, or the traditionally styled Price Loss Coverage program, based on trigger prices.
Farmers have an additional month, until March 31, to tell the USDA if they want to update their yield and acreage "bases" for crop subsidies. Operators also face a March 31 deadline to select a crop subsidy program - either the shallow-loss Agriculture Risk Coverage or the traditionally structured Price Loss Coverage - for the life of the 2014 farm law. The department announced "a one-time extension" on Friday, the previous yield-and-base deadline; the decision period opened on Sept. 29, 2014.
With years of low commodity prices ahead, U.S. corn and wheat growers will stick to traditional crop subsidies, forecasts the Congressional Budget Office. In its annual economic forecast, CBO estimates only 37.5 percent of corn land and 28 percent of wheat land will be enrolled in the new Agriculture Risk Coverage subsidy offered by the 2014 farm law; the bulk will be put into the Price Loss Coverage program, which has the familiar structure of price guarantees.
Growers are more likely to hit the statutory limit on crop subsidies if they choose the Price Loss Coverage option rather than the Agriculture Risk Coverage option, say economists Jonathan Coppess, Gary Schnittkey and Nick Paulson of U-Illinois.
Economist Carl Zulauf of Ohio State University says crop subsidies of $30-$90 an acre are possible with record crops and farm-gate prices that average $3.60 a bushel, reports DTN.
U.S. farmers will stick with traditional crop subsidies based on crop prices and shy away from the crop revenue subsidy created in the new farm law, says the Congressional Budget Office.