"For example, producers could face the option of participating in the ARC program and purchasing a reduced level of SCO coverage or staying out of ARC and purchasing full SCO coverage. In a year when the current price is above the 5-year Olympic average, the full SCO strategy may dominate whereas ARC plus a reduced SCO could be optimal when the current price is below the 5-year Olympic average.
"Similarly, the ARC or RLC revenue safety nets would look more attractive after consecutive years of good yield results going into the 5-year Olympic average as opposed to multiple years of bad yields, such as could happen in parts of the country due to lingering drought conditions. While the revenue safety net might be very relevant during the bad yield years, it would also provide less protection relative to expected yield and revenue levels in following years.”
Lobbying groups also weighed in on the various elements of the Farm Bill alternatives. The American Farm Bureau wrote a letter to all of the conferees from the House and Senate. AFBF did not pick either the House or Senate proposals for a safety net, but urged the members of the conference committee to pick and choose a variety of elements.
Specifically the group wanted:
1. Requires that if a three-year AGI for either on-farm or off-farm income exceeds $950,000, program benefits are not allowed. The Senate has the same provision but sets the cut-off level at $750,000. We oppose means testing completely, but prefer the House to the Senate provisions.
2. Makes Price Loss Coverage (PLC) payments on planted rather than historical acreage. The Senate bill makes similar payments (Adverse Market Payments) on historical plantings or base acres. We support payments being made on planted acres, but note it is imperative rates not be set too high as to encourage planting for government programs. We recognize this is a potential issue in tying a program to planted versus base acres.
The group opposes certain elements in the Senate version of the Farm Bill:
1) Reduces crop insurance premium subsidies for any person with an average Adjusted Gross Income in excess of $750,000 by 15 percentage points. In essence, this provision raises the cost of the premium for farmers by almost 40 percent.
2)The Agriculture Risk Coverage (ARC) and Adverse Market Payments (AMP) combined payment limit for all commodities except peanuts is $50,000 per person and the ARC and AMP combined payments for peanuts is $50,000 per person. Loan Deficiency Payments (LDPs) are limited to $75,000 per person and a separate $75,000 LDP is applied to peanuts. We oppose payment limits.