‘Safety net’ payments determined by yields, prices (Keeping the Farm)
(Editor’s note: Robin Talley is a district director with Delaware Farm Service Agency.)
The 2018 Farm Bill continues two important safety net programs.
We call them a “safety net” because the Agricultural Risk Coverage and Price Loss Coverage programs trigger payments when market forces decrease crop prices or when yield losses occur that reduce revenue.
Those “triggers” take time to play out. We don’t know how much revenue was lost until the marketing year for the crop is over.
Right now, we are working on ARC and PLC safety net payments for participating farms that suffered from market downturns during 2018.
We expect to issue nearly $6 million in Delaware.
Let’s look at why those payments are necessary.
Price Loss Coverage does what it says — the program protects from a drop in the price.
If the 12-month national average price drops below a specified amount, a payment will be triggered to make up the shortfall.
As an example, the reference price for wheat is $5.50 per bushel.
The national average price for the 2018 marketing year turned out to be $5.16 per bushel., and a $0.34 payment was triggered.
If your farm has a wheat base, an established yield of 55 bushels per acre, and was enrolled in PLC for 2018, the statement in your mailbox reflects a payment of $15.90 per acre.
PLC payments were also triggered for corn, grain sorghum and barley.
It doesn’t matter where your farm is located — if you were enrolled in PLC in 2018 for one of these crops, you are eligible for a payment.
Ag Risk Coverage is a revenue program. It has two options: County coverage and individual coverage. The vast majority of producers on Delmarva took the county coverage option.
County coverage is tied to the expected revenue for the crop at the county level. It uses county average yields and historical market year prices averaged across the entire country. If the current year revenue for the crop falls below 86 percent of the expected or “benchmark” revenue, a payment is triggered.
In Delaware, 2018 revenue for corn was lower than the benchmark.
This was primarily due to yields, which suffered across the state due to the tough growing season.
Soybean revenue was also lower because the national average price in 2018 was $1.15 less per bushel than the five-year average.
Using historical prices and yields, we expected 2018 revenue for non-irrigated corn in Kent County, Del., to be $62 per acre.
The guarantee (86 percent of the expected revenue) was $535.
Due to lower yields and a slight drop in price, the actual revenue was $408.
Since the actual revenue is significantly less than 86 percent of the benchmark, the maximum payment of $62.16 per acre was triggered.
If you farm in Kent County, Del., had a corn base, and were enrolled in ARC-County for 2018, the statement in your mailbox represents this $62.16 per acre.
Crunching the numbers for soybeans results in a payment of $25.20 per acre in Kent County.
ARC-County payments were triggered throughout Delaware, in varying amounts, for corn, soybeans, wheat and barley.
An FSA office can print a detailed report that shows the specific yields, acres and prices used to calculate payments for each of your farms.
It makes all these numbers much easier to put together and understand. Call or stop by if we can assist you.
The mechanics of these programs is a lot to take in but please consider one last number.
The 2014 Farm Bill put about $28 million in ARC and PLC payments into the Delaware farm economy.
These programs were continued in the 2018 Farm Bill, with a few changes. We want to be sure you understand your options. Look for information workshops to be held in each county in the coming weeks.
The best way to stay updated is to subscribe to GovDelivery, our electronic news and notification service.
To begin using GovDelivery, subscribe online at http://www.fsa.usda.gov/subscribe or contact a local office for subscription assistance.
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The Kent County USDA offices of Farm Service Agency and Natural Resources Conservation Service is moving to the Centre at Longacre. The new address is 519 Red Haven Lane, Suite 200, Dover.
The new location is not quite ready so they will be at a temporary location until approximately Nov. 20.
Call 302-741-2600 or 302-678-4250 for assistance.
For updates on the status of the move, you can visit www.fsa.usda.gov/state-offices/Delaware.
1-800-634-5021 410-822-3965 Fax- 410-822-5068
P.O. Box 2026 Easton, MD 21601-8925