Arkansas farmers have received $160.4 million in so-called safety-net programs to date under the 2014 farm bill, according to the U.S. Department of Agriculture.
This is the first time farmers have gotten payments under the legislation, which provides assistance only when markets or yields are down. Previous farm bills issued payments regardless of market conditions or crop yield to provide farmers with a minimum guaranteed income.
Randy Veach, president of the Arkansas Farm Bureau Federation, said Wednesday that the safety-net payments would provide some help to Arkansas farmers hurt by falling commodity prices and lower yields. But he said the payments wouldn't enable farmers to make a profit.
"We'd a lot rather have better prices in the market than to have [the safety-net] payments," said Veach, who farms cotton, rice and soybeans in northeast Arkansas.
Operators of 16,339 Arkansas farms will receive safety-net payments for the 2014 market year, the USDA said in a news release. A total of 74,694 Arkansas farms participated in the programs, which means 58,355 farms in the state didn't qualify for payments.
The payment total will rise over the next few weeks. About 80 percent of the checks due to Arkansas farmers had been mailed as of Nov. 3, a USDA spokesman said Wednesday.
The 2014 farm bill was written at a time of high commodity prices, and supporters said it would save the federal government billions of dollars over 10 years. Since then, commodity prices have plunged, and the USDA now forecasts that net farm income in the United States, adjusted for inflation, will fall 53 percent from where it was two years ago, from $123.7 billion in 2013 to $58.3 billion in 2015.
The net farm income figure includes profits from beef, pork, poultry and crops, but the head of AgHeritage Farm Credit Services in Arkansas said recently that average crop prices were down 35 percent this year.
Under the 2014 farm legislation, farmers had to choose between two safety-net programs for five years. The Price Loss Coverage Program, which the USDA says was selected by more than 90 percent of the state's rice growers, makes payments when market-year average prices are below reference prices.
"For example, 29 counties in Arkansas harvest long-grain rice, and long-grain rice producers have experienced a 15 percent drop below the historical benchmark price established by the PLC program," said Linda Newkirk, executive director of the USDA's Arkansas Farm Services Agency.
Through Nov. 3, Arkansas farmers have received $146,695,326 under the Price Loss Coverage Program, according to the USDA. The payment rate for rice was about 2 cents per pound, compared with a rate of 2.35 cents per pound in 2014 under the old direct payment system, a USDA spokesman said.
The second program, called Agriculture Risk Coverage, created payment rates for each county by comparing historical average crop yields and prices with 2014 actual yields and prices. Payment rates can vary among counties.
Through Nov. 3, Arkansas farmers have received $13,714,515 in Agriculture Risk Coverage payments, according to the USDA. Most of the money went to soybean, corn and grain sorghum growers, the agency said.
Nationwide, payments for both programs through Nov. 3 totaled more than $4.5 billion, the USDA said.
The payments were subject to a 6.8 percent reduction as a result of the mandatory federal budget cuts known as sequestration.
Veach said it was still too early to judge the effectiveness of the 2014 farm legislation. He said 2015, for which farmers will receive safety-net payments in late 2016, would provide a good test because it combined low prices in the markets with generally low crop yields in Arkansas.
"We're just now getting a glimpse of the kind of safety net we have or don't have," he said.
Prices for January 2016 rice fell 22.5 cents Wednesday, to close at $11.84 per hundredweight.
Rice prices were about $14 per hundredweight at this time last year, Veach said, adding that it was unlikely they would return to that level in the near future.
Business on 11/19/2015