USDA begins issuing $7B in crop payments
October 7, 2016
The Agriculture Department announced that beginning today, 1.7 million farms that enrolled in either the Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) programs will receive safety-net payments totaling $7 billion due to market downturns during the 2015 crop year.
While some critics on the right and left are likely to criticize the payments, Agriculture Secretary Tom Vilsack said today he is glad USDA can make the payments to farmers who are under stress.
"This fall, USDA will be making more than $7 billion in payments under the ARC-County and PLC programs to assist participating producers, which will account for over 10 percent of USDA's projected 2016 net farm income," Vilsack said in a news release.
"These payments will help provide reassurance to America's farm families, who are standing strong against low commodity prices compounded by unfavorable growing conditions in many parts of the country. At USDA, we are standing strong behind them, tapping in to every resource that we have to help."
Vilsack noted that USDA has provided other assistance to farmers this year. The department, he said, has created a one-time cost share program for cotton ginning, purchased about $800 million in excess commodities to be redirected to food banks and those in need, made 11 million in payments to America's dairy farmers through the Dairy Margin Protection Program, and reprogrammed Farm Service Agency funds to expand credit options for farmers and ranchers in need of extra capital.
Unlike the old direct payment program, which issued payments during both weak and strong market conditions, the 2014 farm bill authorized the ARC-PLC safety net to trigger and provide financial assistance only when decreases in revenues or crop prices, respectively, occur, USDA noted.
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The ARC and PLC programs primarily allow producers make payments on a percentage of historical base production, limiting the impact on production decisions, USDA added.
Nationwide, producers enrolled 96 percent of soybean base acres, 91 percent of corn base acres and 66 percent of wheat base acres in the ARC-County coverage option. Producers enrolled 99 percent of long-grain rice and peanut base acres and 94 percent of medium grain rice base acres in the PLC option. Overall, 76 percent of participating farm base acres are enrolled in ARC-County, 23 percent in PLC and 1 percent in ARC-Individual.
Payments are made to producers who enrolled base acres of barley, corn, grain sorghum, lentils, oats, peanuts, dry peas, soybeans, wheat and canola. In the upcoming months, payments will be announced after marketing year average prices are published by USDA's National Agricultural Statistics Service for the remaining covered commodities.
These include long- and medium-grain rice (except for temperate Japonica rice), which will be announced in November, remaining oilseeds and chickpeas, which will be announced in December, and temperate Japonica rice, which will be announced in early February 2017. Upland cotton is no longer a covered commodity.
The Budget Control Act of 2011, passed by Congress, requires USDA to reduce 2015 ARC and PLC payments by 6.8 percent, USDA noted.
–The Hagstrom Report