Commodity programs – to change or not to change?

The two primary revenue programs included in the 2014 farm bill are the Agriculture Risk Coverage (or ARC) program and the Price Loss Coverage (or PLC) program.

But the vast majority of corn and soybean growers, including those in Indiana, selected the ARC-County program, noted Indiana Farm Bureau associate policy analyst Shelby Swain. For producers in this program, a payment is triggered whenever the actual crop revenue is less than the ARC-CO guarantee.

“The ARC program tends to be a little bit controversial,” said Mary Kay Thatcher, senior congressional relations director at the American Farm Bureau Federation. Most farmers, she said, knew when they first signed up that ARC payments were likely to be a little higher in the first couple of years and then lower in the last couple of years of the program.

But the decreases in payments are expected to be quite high, Thatcher said. From 2015 to 2018, these decreases are expected to average about 30 percent for corn, 27 percent for soybeans and 25 percent for wheat.

Another major problem is discrepancies in payments from one county to the next – “a farmer in one county getting a $60 payment for corn and the guy across the county line getting zero,” Thatcher explained.

“I think when we look at the discrepancies between counties, and the amount of price that’s going down, it’s going to mean that we ought to spend some big time talking about farm bill programs before the spring of 2017, when we’re testifying before Congress,” she said.

County-to-county variations can be reduced through modifications, noted Swain, adding that this has budget implications. Among the options are lengthening the number of years used in the Olympic average from five years to seven or 10 years. Another “disparity option,” Swain said, would involve using the higher of a 5-year or 10-year Olympic average.

“This would partially address the disparities in benefits across county boundaries,” Swain said. And yet another possibility is to consider new methods of reporting yields.

Questions to consider:

1. How have commodity programs worked for you?

2. What kind of issues, if any, have you experienced?

3. How high of a priority are commodity programs for you and your farm?