Farms face spring safety-net decision

A year after the 2014 farm bill was signed into law, Arkansas farmers and producers are grappling with decisions that will affect their safety net for the next several years.

Agricultural leaders say a preponderance of choices have resulted in at least some uncertainty since President Barack Obama signed the 2014 farm bill.

"There's a lot of things to consider here and some big decisions to be made by our farmers and ranchers across the state," said Randy Veach, president of Arkansas Farm Bureau. "Each individual farmer is finding that their decision is going down to the crop mix."

The 2014 bill ended direct payments, which were paid regardless of weather conditions or crop prices. In their place, farmers are served by a variety of programs that come into play when certain conditions are met.

Veach said their elimination resulted in less of a safety net for farmers. The payments totaled $244 million per year in Arkansas, he said.

"It was right there -- dependable," he said. "What we're really looking at is price support. With the old farm program, we had that always in there with direct payments."

But Eric Wailes, a professor of agricultural economics at the University of Arkansas, said Congress designed the farm bill to scale back spending while still providing a safety net.

"This is a significant set of reforms in terms of commodity policy and new forms of crop insurance," he said. "This was designed to shift more to risk management and reduce the cost of the entire farm bill."

By March 31, farmers must choose between price loss coverage, which kicks in if prices are below a national reference point, or agricultural risk coverage, which kicks in for revenue losses. Farmers cannot change their decision.

Within the agricultural risk coverage program, farmers must choose between a county or individual reference point. And within the price loss coverage program, farmers will have to decide if they want to purchase supplemental coverage, which would insure their insurance deductibles.

Regardless of the program, farmers can elect to update their payment yields and to reallocate their base acres to reflect their current mix of crops. The deadline to do that is Feb. 27.

"It's a real challenge and farmers are going to have to do a lot of thinking in terms of what works for them," Wailes said. "It's a difficult choice because farmers have to decide and are locked into a decision when they don't know what prices are going to be."

Though the 2014 farm bill eliminated direct payments, it funded other programs that have helped some Arkansas producers.

The Livestock Forage Disaster Program and the Livestock Indemnity Program expired in 2011 and weren't renewed by Congress when the 2008 farm bill was extended in 2011. The 2014 farm bill made the programs retroactive to 2011 and changed the rules so producers are no longer required to purchase insurance to be eligible.

The U.S. Department of Agriculture estimated it would pay $2.5 billion in retroactive payments under the programs nationally.

"There's been a process that's taken longer and has been more frustrating than what I think farmers wanted," Wailes said. "But most of the issues have been ironed out and it's been rather impressive that USDA has been able to get things this pulled together."

He advised farmers with remaining questions to go to a training session held by the University of Arkansas Division of Agriculture. He said the Cooperative Extension Service been making presentations since the bill was signed last February.

For its part, the USDA said implementation has gone smoothly considering the scope of the change.

"The farm bill achieves meaningful reform while making critical investments that create jobs, drive long-term economic growth and support more resilient rural communities where people want to live and raise families," U.S. Agriculture Secretary Tom Vilsack said. "Thanks to the farm bill, farmers have a common-sense risk management system in place to protect their families and livelihoods from future disasters.

Business on 02/07/2015

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