Price Loss Coverage

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.

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.

Key provisions of the new farm policy law - insurance, conservation, dairy and the traditional crop subsidies - are the focus of a new edition of Choices, the magazine of agricultural economics.

When commodity prices fall, growers may collect payments from crop insurance as well as deficiecy payments from traditional crop subsidies, says economist Carl Zulauf of Ohio State University in an analysis.

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.

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.