More Updates on the Senate Farm Bill

• June 29, 2012
• Paul Neiffer

Here are additional updates and comments on the Senate Farm Bill:

• Eliminates Direct Payments, Counter-Cyclical Payments (CCP), Average Crop Revenue Election (ACRE) payments and Supplemental Revenue Assistance Payments (SURE) as of the end of the 2012 crop.  Beginning with the 2013, all of these payments will be eliminated.  This creates $15 billion in savings for deficit reduction over the five years of the Bill.
• “Ends Farm Payments to Millionaires”.  This is the Senate’s heading on this part of the Bill, but it actually refers to payments not being allowed if the total AGI for the person or entity is $750,000 or more.
• Payments will be capped at $50,000 per person or entity.
• Payments will only go to farmers with an active stake in the farming operation.
• A new program called Ag Risk Coverage (ARC) will be implemented that will complement current crop insurance programs.  It will protect against both yield and price losses.  Farmers can make a one-time choice between individual farm level coverage of county level coverage.
• Payments will only be available when actual losses are experienced off of a benchmark revenue calculated using an Olympic average of the previous five crop years (throwing away the high and the low).  Payment rates depend on whether individual or county coverage is elected and will only be paid on acres planted.
• Marketing loans will still be available.
• Current Sugar Program is extended through the 2017 crop.
• A stronger dairy program is proposed to protect dairy margins equal to the difference between the all-milk price and a national feed cost.
• CRP will be phased down from the current 32 million acres to 25 million acres over the next few years.

My comments are as follows:

For many farmers, the chance of collecting much money each year under these programs will be somewhere between slim and none.  They are also tightening up the rules on active participation and the AGI limits are now a hard number with no distinction between farm and non-farm income.

The dairy program may provide additional needed margin relief to diary farmers and there appears to be no cap on these payments.  However, to participate, the farmer will be required to pay an annual assessment fee based upon pounds of production and is capped at $2,500.  This fee is designed to cover the cost of accumulating the data needed to determine the pay-out, if any.

We are sure that the House will have changes and the final Bill will not be exactly like this, but many of these provisions will remain.

Paul Neiffer

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