By DTN Staff

No. 7 Farm Bill Programs ARC and PLC Evolved Throughout 2015

By Chris Clayton

DTN Ag Policy Editor

Lower prices for corn and soybeans meant farm-program payments would be more critical for farmers in 2015 just as they were wading through the intricacies of new farm programs.

With net farm income falling 38% from 2014, the first round of roughly $3.9 billion in payments from Agricultural Risk Coverage and Price Loss Coverage programs provided necessary cash flow in the fall to about 800,000 farm operations.

Farmers throughout most of Missouri saw historically high corn yields, so only a couple of counties triggered any kind of ARC payment. The same held true for most of Mississippi, Alabama and Tennessee, as well as southern Illinois, southeast Kansas and northeast Oklahoma.

Fewer counties nationally generated payments for soybeans. The national market average price for the 2014-15 soybean crop was $10.10.

For wheat, ARC payments generated by county were predominately in the Southern Plains — Kansas, Oklahoma and Texas panhandle — as well as the major growing counties in Washington State, Oregon and northern Illinois.

All of this occurred after an extended enrollment period stretching into last spring. USDA reported farmers ended up overwhelmingly choosing ARC for corn and soybean base acres. For corn, roughly 1.24 million farms totaling more than 90 million acres, or about 91% of all corn farms, signed up for ARC.

For soybeans, ARC was chosen on 52.6 million acres by more than 1 million farms, or 96% of the eligible farms.

Wheat acres are more divided. About 35.4 million acres and 527,000 farms signed up wheat acres for ARC while 27 million acres went for PLC by 271,000 farms.

For grain sorghum, about 5.9 million acres were enrolled in PLC while another 2.99 million acres went into in ARC.

Nearly all rice acres — 4 million or so — were enrolled in PLC, along with more than 2 million peanut acres and 3.8 million barley acres.

Sequestration cuts reared up and took a bite out of safety nets. Farmers ended up taking a 6.8% cut in their payments.

Farmers learned how important it was to understand the “administrative” county at the Farm Service Agency. For growers with farms in multiple counties, the designation of an administrative county meant Agricultural Risk Coverage-County checks would not be paid at county rates where the ground is located, but where records are housed. That initially meant some farmers were getting minimal payments even though most of their ground was located in counties collecting larger ARC checks.

After some reporting by DTN, FSA retroactively changed its policy to allow farmers to calculate ARC-County payments based on the physical location of each tract of the farm.

FSA stated farmers will have until Feb. 1, 2016, to request a recalculation. For the 2016-18 crop years, farmers would have to transfer the farm to a different county or reconstitute the separate tracts of the farm that would then allow those tracts to be transferred.

In mid-December Congress reopened the farm bill to allow unlimited gains through marketing loans by reinstating commodity certificates. The language included in the omnibus spending bill was considered critical to the cotton industry, which has been struggling with low prices. Cotton cooperatives remain one of the biggest users of marketing loans.

USDA also finalized a rule tightening requirements on active engagement for farm managers in general partnerships and joint ventures. Such entities are now limited to a maximum of three farm managers collecting payments if the farm meets definitions regarding size and complexity.

Farm managers must prove they contribute at least 500 hours of farm-management work per year or at least 25% of the time necessary to run the farm. They must also keep some sort of record book to show they are indeed doing the management or labor required. This new definition defines “active personal management” on the operation and only applies to farm managers on non-family farming operations seeking to qualify multiple people for program payments.

If a person is found ineligible, the overall operation could lose payment eligibility for up to $125,000.

As farm programs move into 2016, the ARC guarantee will likely lessen because of lower prices, meaning there will likely be a lot of arguments next fall over county yields.

Chris Clayton can be reached at Chris.Clayton@dtn.com.

Follow him on Twitter @ChrisClaytonDTN.