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1 1 (August 12, 2015)

handle is hein.crs/crsnalcaaaae0001 and id is 1 raw text is: ,. 'Congressional Research Sertdce Informing the legislative debate since 1914 Overview of Farm Safety Net Programs August 12, 2015 The federal farm safety net provides risk protection and financial support to U.S. farmers. The three components are the permanently authorized federal crop insurance program, farm commodity programs (crop years 2014-2018), and permanently authorized agricultural disaster programs. The 2014 farm bill (the Agricultural Act of 2014; P.L. 113-79) enhanced crop insurance, revised commodity programs, and retroactively authorized four disaster programs beginning in FY2012. During the next 10 years, the combined federal cost of the farm safety net is expected to average about $13.5 billion per year, based on estimates from the Congressional Budget Office. The U.S. Department of Agriculture (USDA) administers the programs. See Table 1 for details and a list of CRS reports. The federal crop insurance program is considered by many farmers and policymakers as the centerpiece of the farm safety net. The program makes available subsidized insurance for about 130 commodities ranging from apples to wheat. When purchased, these multiple peril policies help producers manage financial risks associated with a loss in yield or crop revenue (Figure 1). Insurable causes of losses include adverse weather (e.g., drought and flood) and Figure I. Crop Insurance Illustration Policy tndannifhes the producer if actusi rcvcauc fags short of guarantee bdsed an paces: pfler to ptanting time, Atual MlTket Rvenue Exited A nut MPIL I-n4m-n Et-ctr Cca~rp e Jo cowflgt Qrdv d~s~1 14~ ~ (fr~ n p S ~ 1' ~ Ldu~i rncj XI actual y~Sd t __________ .3. _________ Source: CRS. Note: Where available and if purchased, the Supplemental Coverage Option (SCO) policy covers up to 16 percentage points of the deductible when triggered by a county loss. Policy applies to planted (not historical) acreage. insects or disease outbreaks. The average premium subsidy is 62%, and projected federal cost is $8.8 billion per year. Farm commodity programs provide price and income support for a much narrower list of covered and loan commodities such as corn, soybeans, wheat, rice, and peanuts. Payments are made when the actual crop price drops below a statutory minimum or when revenue is below a guarantee based on prices and yields during the most recent five years (Figure 2 and Table 1). Participation is free. Projected program costs are just over $4 billion per year. Dairy and sugar producers have separate programs. Agricultural disaster programs cover livestock producers and tree fruit producers, who generally do not benefit from crop insurance and/or commodity programs. These programs make payments for (1) livestock deaths in excess of normal mortality, (2) forage losses related to drought, (3) other losses for producers of livestock, honey bees, and farm-raised fish, and (4) losses in trees/bushes/vines from which an annual crop is produced. Participation is free. Projected program costs are about $500 million per year. No disaster designation is needed. Figure 2. Commodity Program Illustration jjg ff(Jmakes a payment h~rn nitna! PrIce at Ln Nacu L rce, paymentt wheti aet~t ¢ovp revenwe tit beow 86 % of Source: CRS. Notes: Producers select either PLC or county-level ARC for each covered crop, or individual ARC, which uses a single farm-level revenue guarantee for all crops. Base acres and program yield are based on historical plantings for each farm. Averages in benchmark exclude high and low years. www crs.gov 1 7-5700

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