Written by: Amie Alexander, JD/MPS Candidate, William H. Bowen School of Law
On April 25, 2018, U.S. Sens. John Thune (R-S.D.) and Sherrod Brown (D-Ohio) introduced bipartisan legislation the two members of the Senate committee on Agriculture, Nutrition, and Forestry are advocating to be included in the 2018 farm bill.
The Agriculture Risk Coverage (ARC) Improvement and Innovation Act would modify the current ARC program by modifying the payment calculation and making improvements to its safety net potential.
The Agriculture Risk Coverage (ARC) program provides support to farmers when losses exceed recent market averages at the county or individual farm level. Since the program’s implementation in passage of the 2014 farm bill, commodity prices have experienced the steepest drop in net farm income since the Great Depression. The U.S. Department of Agriculture (USDA) predicts that 2018 will represent another year of declining farm income for the fifth consecutive year.
ARC in its current form uses a five-year rolling commodity price average to calculate payments. Advocates of the legislation stress that a new price calculation system is needed due to subsequent years of low commodity prices.
The legislation would modify the current program by using a 10-year market price average as a cap on reference prices, a step that sponsors of the bill say would move toward ensuring farm programs are more fiscally responsible for taxpayers. The bill also focuses on ensuring that payments are not being made for land that is no longer being farmed.
Additionally, beginning farmers would have a new opportunity to become eligible for new or additional base acres on certain farms that are ineligible under the current program.
Among changes to the program are implementation fixes which address lessons learned through the initial implementation of the program, such as the use of more widely available data for yield calculations, the calculation of safety net payments based on a farm’s physical location, rather than the antiquated administrative county unit, and provides the authority to split some large counties into smaller units to better reflect a producer’s history.
You can find specific changes proposed as compared to the current program here.