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1 1 (August 16, 2017)

handle is hein.crs/govcfvw0001 and id is 1 raw text is: Farm Bill Primer: The Farm Safety Net The federal farm safety net provides risk protection and financial support to U.S. farmers. The three components of the farm safety net are (1) farm commodity programs, (2) crop insurance, and (3) disaster assistance programs. The U.S. Department of Agriculture (USDA) administers the farm safety net programs. The 2014 farm bill (Agricultural Act of 2014; P.L. 113-79) revised commodity programs, enhanced crop insurance, and retroactively authorized the four new, permanent disaster programs beginning in FY2012. See Table 1 for program cost estimates by crop year and Table 2 for program details and a list of related CRS reports. Upland cotton, dairy, and sugar producers have separate programs, discussed in Table 2. Farm commodity programs provide a floor price and income support for eligible commodities and producers. They are authorized by periodic farm bills, most recently by the 2014 farm bill for the 2014 to 2018 crop years. The Market Assistance Loan (MAL) program provides both a floor price and interim financing for so-called loan commodities. A participating producer may put a harvested loan crop under a nine-month, nonrecourse loan valued at a statutory commodity loan rate. Then the producer has the option to repay the loan and reclaim the crop if market conditions are favorable or select another MAL benefit- for example, LDP or MLG (see Table 2)-when crop market prices are below the loan rate. The Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs provide additional income support for certain covered commodities such as corn, soybeans, wheat, rice, and peanuts. Producers were given a one-time choice under the 2014 farm bill of either (1) PLC or county-level ARC for each covered crop or (2) individual ARC-which covers all crops with a single farm-level revenue guarantee. The choice was to last for 2014 through 2018. Participation is free. For both ARC and PLC, the payments are decoupled-that is, based on historical base acres rather than actual production. Producers must meet eligibility requirements to participate in farm programs and are subject to annual payment limits. (For details, see CRS Report R44739, US. Farm Program Eligibility and Payment Limits.) Also, as a member of the World Trade Organization (WTO), the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy. (For details, see CRS In Focus IF10 192, WTO Disciplines of Domestic Support for Agriculture.) Federal crop insurance is permanently authorized by the Federal Crop Insurance Act as amended (7 U.S.C. 1501 et - nom go mppm qq\ , q I as 11LIANJILiN, Updated August 16, 2017 seq.) but is periodically modified by new farm bill legislation. It makes available subsidized multiple peril crop insurance for eligible commodities, which helps producers manage risks associated with a loss in either yield or crop revenue depending on the type of policy selected. Insurable perils include drought, flood, insects or disease outbreaks, and crop-specific revenue shortfalls. The policies are sold and serviced by private insurance companies. Federal support includes paying a portion (an average of 62%) of producer premiums, paying $1.4 billion in annual delivery costs, and sharing underwriting risk with the private insurance companies. 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. No disaster designation is needed for program availability. Farm safety net outlays are expected to average $13.6 billion per year for crop years 2014 through 2018. Table I. Safety Net Costs, $ Billions, Crop Year Program 2014 2015 2016 2017F 2018F MAL 0.4 0.3 0.1 0.1 0.1 ARC 4.5 5.9 3.8 2.9 2.0 PLC 0.8 1.9 3.8 2.9 2.5 Cotton, 0.5 0.1 0.4 0.0 0.0 MPP (net)b (0.0) (0.0) (0.0) 0.1 0.1 Crop Ins. 7.8 5.9 3.5 7.0 7.3 Disaster 1.8 0.7 0.5 0.5 0.3 Total 15.8 14.8 12.0 13.4 12.3 Source: Realized data for 2014-2016 are from USDA. The Congressional Budget Office's (CBO) June 2017 baseline data are used for 2016 ARC and PLC outlays and all 2017-2018 projected outlays. CBO fiscal year data are adjusted by CRS to crop year equivalents. For details, see CRS Report R44914, Farm Safety-Net Payments Under the 2014 Farm Bill: Comparison by Program Crop. a. Upland cotton programs (see Table 2). b. MPP outlays minus producer-paid premiums. .O 'T

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