The House Programs.
Producers can enroll crops in the Revenue Loss Coverage program which is similar to the Senate’s ARC program. RLC is similar to the county-based option under ARC, except payments are available on up to 85% of planted acres and 30% of prevented planted acres, and producers can make participation choices on a crop-by-crop basis. Total payment acres on a farm generally cannot exceed the sum of historical base acreage on the farm. Payments are made when actual revenues fall at least 15 percent below the benchmark. Thus the program covers losses of between 15% and 25% of the benchmark, and payments are made a year after the harvest. There is a $50,000 payment limitation and all recipients must be under a $950,000 Adjusted Gross Income.
The Price Loss Coverage program provides payments that occur when market prices fall below a trigger level, and payments depend on fixed program yields instead of actual harvested yields in a given year. PLC payments are made on 85 percent of planted acreage and 30 percent of prevented planted area rather than on fixed base acreage. As with RLCs, total payment acreage is limited to historical base acreage on a farm. Producers are given the option of updating payment yields to 90 percent of the 2008-2012 average yield per planted acre. If any of the yields are below 75 percent of the 2008 through 2012 average county yield, 75 percent of the average county yield may be substituted for those farm yields.
The Supplemental Coverage Option
The SCO appears in both versions, but has many differences. The SCO is an area-based crop insurance product that a producer can purchase in addition to a traditional policy with individual coverage. In both bills, SCO coverage is based upon the county benchmark and revenues, similar to Group Risk Insurance Protection (GRIP) plans. The program covers losses between the SCO deductible and the individual insurance policy coverage level multiplied by the expected county revenue. In the Senate bill, SCO policies must have at least a 22 percent deductible if the producer is enrolled in ARC, and at least a 10 percent deductible in the case of a producer not enrolled in ARC. In the House Committee bill, SCO policies must have at least a 10 percent deductible for a producer enrolled in PLC.
Now that you are confused…
Agriculture policy economist Brad Lubben from the University of Nebraska and several colleagues attempted to analyze the decision making further for farmers trying to select their choice of safety net options. Lubben writes: “The numerous differences in calculations, guarantee levels, and payment/subsidy rates make it complex to directly analyze risk management strategies that integrate multiple programs and thus, difficult to implement an effective risk management portfolio and make optimal risk management decisions.