Posted March 10, 2015
The new farm programs for grain and oilseed farmers will pay them up to $7 billion annually over the next few years, according to an Agri-Pulse available here. Politico also published an article available here.
The Congressional Budget Office and the University of Missouri’s Food and Agriculture Policy Research Institute (FAPRI) that provides analysis to the congressional agriculture committees prepared the forecasts.
Corn growers will receive the lion’s share of payments, due to the sharp decline in market prices over the past two years.
CBO projects that total payments to corn and soybean producers from Agricultural Risk Coverage alone will be $3.37 billion in fiscal 2017, according to Politico.
With corn and soybeans enjoying record prices while the rest of the country struggled under the Great Recession, the House and Senate Agriculture Committees developed two substitute programs more sensitive to real needs and market changes.
ARC had an early-in, early-out approach, intended to buy time for a farmer to adjust to markets falling. The second program, Price Loss Coverage or PLC, followed the more traditional target price approach, slower to trigger but then defining a more permanent floor for producers.
Farmers have until the end of this month to sign up for one of the programs, according to Agri-Pulse.
Sixty percent of wheat growers nationwide are expected to choose PLC, while most soybean growers will choose ARC.
After 2018, ARC payments will decline dramatically as the five-year moving average begins to reflect the drop in commodity prices. FAPRI economists estimate that ARC payments will drop from $3.1 billion in fiscal 2018 to $1.8 billion in 2019 and then to $1.2 billion the following year.
For more information on commodity programs, please visit the National Agricultural Law Center’s website here.