2015 in Review: Top Developments in U.S. Farm Programs
Updated: Jul 2
We’ve already looked back together at the top ag law developments for 2015. Now it’s time to review the top developments with U.S. farm programs for this year. 2015 has seen the U.S. Department of Agriculture (USDA) continue to work to implement the 2014 Farm Bill. Let’s reflect on the top developments in 2015.
1. Whole Farm Coverage Expanded – In 2015, Whole Farm Revenue Insurance became the first crop insurance product to be available in all U.S. counties for the 2016 crop year. Whole Farm Revenue Insurance allows producers to insure from 50 to 85 percent of their farm revenue (up to $8.5 million in insured revenue). The product has potential to be utilized by diversified agricultural operations. To learn more details about the product, see Whole Farm Revenue Insurance Changed for 2016 Crop Year.
2. Supplemental Coverage Option (SCO) Expanded – The SCO crop insurance option was expanded in 2015. SCO is a county-level policy endorsement that covers a portion of the deductible for the underlying crop insurance policy. Producers can purchase SCO coverage if he/she is not participating in the Agricultural Risk Coverage option. Beginning with the 2016 crop year, SCO coverage will be available for oats in Garrett, Washington, Frederick, Carroll, Baltimore, and Harford counties (irrigated and non-irrigated) and in all counties for wheat. To learn more about the program, see Supplemental Coverage Option Now a Part of the Federal Crop Insurance Program.
3. APH Yield Exclusion Expanded – USDA has also expanded the Actual Production History (APH) Yield Exclusion option. Yield exclusion allows producers in qualifying counties to exclude eligible years from their Actual Production Histories. To be eligible, the county average planted acreage yield must be 50 percent below the simple average for the previous 10 consecutive crop years. In 2015, yield exclusion was expanded for wheat, barley, and processing beans. Yield exclusion has the potential to benefit qualifying Maryland producers by allowing exclusion of lower yields from their APHs and allows the producer to buy down coverage to protect the same level of yield or revenue. For more information on yield exclusion, see Updated: Quick Look at Yield Exclusion Option in 2014 Farm Bill.
4. New Organic Price Elections – 2015 saw USDA expand and improve crop insurance for organic growers. The Risk Management Agency (RMA) with help from the Agricultural Marketing Service and National Ag Statistics Service expanded price election options for organic growers for the 2016 crop year. This will allow organic growers to see higher revenue or yield protections, depending on their crop insurance policy. For more information, see RMA’s website.
5. Sequestration Impacts ARC and PLC Payments – Sequestration became a part of the U.S. budget in 2011 when both parties agreed that if they could not concur on a certain level of cuts, then automatic cuts would go into place. In 2015, producers receiving an Agricultural Risk Coverage (ARC) payment or a Price Loss Coverage (PLC) saw a 6.8% reduction for 2014 contracts. We had previously seen sequester cuts to older farm bill programs (direct and countercyclical payments), so these cuts were not unexpected. Sequester cuts will potentially also impact any payments in 2016 on 2015 contracts.
6. 2014 ARC and PLC Payments Announced – Farm Service Agency announced the first set of ARC and PLC payments for the 2014 crop year. If you are curious how payments are triggered and calculated, see the Farm Bill page on our Crop Insurance page. Those producers in Maryland who elected to participate in the PLC program did not see a program payment this year. Maryland producers electing to participate in the ARC-county program did receive payments in certain counties (see table 1). As of Nov. 3, 2015, Maryland farmers had received close to $1,807,502 in ARC-county payments. We will provide you with estimated payments for the 2015 marketing year in 2016.
7. Record Number of Producers Enroll in Conservation Compliance – The 2014 Farm Bill required producers buying crop insurance to be in compliance with Swampbuster and Sodbuster provisions of federal law. Producers were required to self-certify by June 1, 2015 that they were in compliance with these provisions in order to retain subsidies when purchasing federal crop insurance. A record number of producers (98.2 percent) self-certified by the deadline. To learn more about conservation compliance, see Conservation Compliance Now a Part of Crop Insurance.
8. USDA Proposed to Redefine “Actively Engaged” to Limit Payments to Non-farmers – The 2014 Farm Bill directed USDA to evaluate the current definition for actively engaged in agriculture. Those wanting to collect federal farm program benefits require active engagement. This significant contribution can be capital, land, and/or equipment, as well as active personal labor, active personal management, or a combination. Being actively engaged means providing active personal management, active personal labor, or a combination of the two. USDA was directed to look at redefining active engagement for non-family farming operations and would limit the number of non-family members who could claim to be actively involved in management unless the operation is deemed complex. USDA is currently evaluating the comments made on the proposed regulation and we potentially will see a final rule in 2016. For more information, see New Actively Engaged Rule Proposed by USDA: What Does It Mean for You?.
9. Proposed budget cuts to crop insurance program – The crop insurance program has seen proposed budget cuts in 2015. Proposed cuts would have capped the government’s share of crop insurance premiums and enforced means testing against those purchasing crop insurance. Other proposed cuts would eliminate the Harvest Price Option, an option popular with producers around the country. The crop insurance industry and other agricultural groups have opposed the proposed cuts. To learn more about the cuts, see Art Barnaby’s article of K-State’s AgManager.info, Will the Proposed Crop Insurance Budget Cuts Ever End?.
10. Noninsured Crop Disaster Assistance Program – The Noninsured Crop Disaster Assistance Program (NAP) was revised with the 2014 Farm Bill. NAP now offers buy-up coverage from the 50-percent level to the 65-percent level with producers able to buy-up coverage in 5-percent increments. Protection is up to 100 percent of the established market price. Prior to the 2014 Farm Bill, NAP provided coverage at the 50-percent level and 55 percent of established market price. Farm Service Agency has worked with the University of Illinois to develop a NAP premium and payment estimator program, available at http://fsa.usapas.com/NAP.aspx. You can learn more about the changes to NAP by viewing 2014 Farm Bill Makes Changes to the Noninsured Crop Disaster Assistance Program.
USDA will continue to implement and/or expand programs from the 2014 Farm Bill. These new or expanding programs will offer opportunities for producers to manage risks. 2016 will also see projected ARC and PLC payments for the 2015 crop year (remember they are based on a market year average and that market year does not end till 2016). We may also see payments impacted by sequestration again in 2016. Continue to visit the AREC Extension Crop Insurance page and twitter account for updates on developments in U.S. farm programs in 2016.
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