After more than a year of lobbying, the Senate Agriculture Committee approved its version of the 2012 Farm Bill. While there is a long way to go, including Senate floor amendments and full Senate passage, and then passage of the House version of a Farm Bill, it would be beneficial to see what is pending in the Senate. After all, an eventual Conference Committee of House and Senate members will settle upon some of the contents in the Senate Committee’s effort.
If you remember last fall when the four leaders of the Senate and House Agriculture Committees tried to write a Farm Bill in record time, so the “Super Committee” would include it in a budget reconciliation plan; the concept passed Thursday by the Senate was modeled after that legislation. And don’t be surprised if the House legislation is not far apart, since its leaders had also favored the framework within the Senate plan.
The plan is outlined by Ohio State Farm Policy Specialist Carl Zulauf and based around the safety net known as Agriculture Risk Coverage (ARC), which is joined by a wide range of other enhancements and changes. ARC comes in two choices, one designed for individual farms and one for county coverage. At the outset of the farm program a producer makes an irrevocable choice. Payments cover corn, beans, wheat and a variety of other program crops and are made for an entire farming operation, not for individual FSA farm numbers. Payments, if earned, are made on losses between 11 percent and 21 percent of a benchmark value. Payments are made on planted and prevented planted acres, but cannot exceed the average acres for the farm in the 2008 Farm Bill, and there is a $50,000 limit on payments per entity, as defined in the 2008 Farm Bill. Additionally, the adjusted gross income limitation will become a ceiling on payment eligibility.
But how is a payment calculated for the individual farm coverage?
1) The benchmark value of yield times price determines the revenue. Yield is the Olympic average of the five most recent crop years. Price is the US average price for the first 5 months of the marketing year, or the U.S. loan rate, whichever is highest.
2) The realized value is determined by yield times price, with the yield being the farm operation crop yield, and the price being the Olympic average US price for the most recent 5 crop years.
According to Zulauf, farmers who select the individual farm coverage will receive payments based on the individual crop on farm operation, based on the farm operation yield. However, the losses covered will be between 11 percent and 21 percent of the benchmark revenue.