Ag Policy Blog

Agriculture Secretary Tom Vilsack will be in Minnesota on Thursday to announce more details about the farm safety net.

It isn't likely that the secretary will be announcing sign up dates for the programs, but more likely he will be announcing details about program rules for ARC and PLC. Along with Vilsack's announcement should come the roll out of computer decision tools from Texas A&M and the University of Illinois to help farmers choose between commodity programs.

In anticipation of the farm-bill signup, Kansas State University and Oklahoma State University have announced a new webinar about ARC and PLC, as well as a new Excel-spreadsheet decision tool created by the agricultural economic departments from the two universities.

The Oklahoma State-Kansas State tool came from a grant by the Southern Risk Management Center. Their tool is somewhat simpler than the versions created by Texas A&M and the University of Illinois through USDA funding, largely because of simpler modeling used for price and yield factors. Art Barnaby, an agricultural economics professor at K-State, said the Oklahoma State and Kansas State program isn't as complicated so likely doesn't need a faster internet connect. Farmers download the Excel spreadsheet and change both price and yield assumptions on their own to see how those change the payment outlooks for ARC-PLC and the SCO insurance. Barnaby said the spreadsheet should work on most farms, however, the larger, more complicated operations are likely going to need to test the models developed by Illinois and Texas A&M.

One of the novelties in the coming weeks will be to see just how closely aligned some of these tools will be in helping farmers make decisions.

Program Options

Agricultural Risk Coverage (ARC) is a revenue program designed to supplement crop insurance. ARC has two versions, the countywide coverage that pays on 85% of base acres and the individual coverage level at the farm that pays on 65% of base acres.

Price Loss Coverage (PLC) pays on 85% of base acres or updated yields up to 90% of the 2008-12 average yield per planted acre. PLC pays when the market price for the commodities averages below the reference price set in the law.

Supplemental Coverage Option (SCO) policies are new in the farm bill as an add-on to individual crop insurance. SCO is a countywide policy for yield or revenue that will raise a farmer's insurance coverage level up to 86% of a revenue benchmark.

Deadline Approaching: Winter wheat farmers have a Sept. 30 deadline to buy Supplemental Coverage Option insurance. Keep in mind that if you sign up to buy SCO coverage for winter wheat, but then choose ARC as your commodity program for wheat, you have until Dec. 15 to drop the SCO coverage without facing a premium charge.

The Oklahoma State-Kansas State webinar is Oct. 2 at 10 a.m. Central. The webinar will highlight some of the program tradeoffs between ARC and PLC, as well as the role SCO plays in considering commodity programs. You can register at http://commerce.cashnet.com/…

For a primer on some of the farm bill decisions, you can also replay DTN's Aug. 21 webinar: http://tinyurl.com/…

Farm Service Agency safety net diagram: http://www.fsa.usda.gov/…

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