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1 1 (August 17, 2017)

handle is hein.crs/govcfzx0001 and id is 1 raw text is: 0i;0 F..... ., .. , . Updated August 17, 2017 Farm Bill Primer: ARC and PLC Support Programs The 2014 farm bill (Agricultural Act of 2014, P.L. 113-79), created two new types of crop support programs, Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC), to provide income support at levels above the price protection offered by the marketing assistance loan (MAL) program's loan rates. See CRS Report R43448, Farm Commodity Provisions in the 2014 Farm Bill (P.L. 113-79). Producers were given a one-time choice between PLC and ARC, depending on their preference for protection against a decline in either (a) crop prices or (b) crop revenue, respectively. The selection was for the five-year duration of the 2014 farm bill-the 2014 through 2018 crop years. Furthermore, producers could elect ARC at either the county (ARC-CO) or individual farm (ARC IC) level. PLC and ARC-CO choices could vary across covered crops (listed in Table 1), whereas ARC-IC includes all covered crops on a farm under a single farm-level revenue guarantee. Participation is free. For both ARC and PLC, payments are decoupled-that is, payments are made on 85% of a crop's historical base acres rather than actual production (see Table 1 notes for details on base acres). r rPC Lr.k % ;Cgora$,:o r,'- PLC price protection is based on a statutorily fixed reference price. PLC makes a payment when the national season average farm price (SAFP) is less than the reference price (Figure 1). Figure I. PLC Payment Formula Reference Price -------- - - -- Farm Price rs.NkA PLC •rm price Farm PLC Payments: or MAL oa.l miult) S ailpo r l iz ulti. Source: CRS Notes: See Table I notes for details on program yields. Countya-Le'su ARCv (ARs\C-Ck)) ARC-CO crop revenue protection is based on a five-year Olympic moving average (removing high and low years) of county yields and national SAFP. The revenue guarantee for ARC-CO equals 86% of the benchmark revenue-the product of average county yields and average national prices (Figure 2). A payment is made if the product of current-year county yield and SAFP is below the revenue guarantee. The per-acre payment rate is capped at 10% of the ARC-CO county revenue guarantee. Figure 2. County-Level ARC-CO Payment Formula County Revenue Guarantee Guaanee------------------CutyA' C ........................ '<wg atorI tPActual County AU~ Revenue ',.t co g y w t d MAL osn razes Farm ARC-CO Paymnents-, 86%. Source: CRS Instead of an ARC-CO revenue guarantee on a crop-by- crop basis, farmers could select a farm-level guarantee that includes all covered crops on a farm. A single, whole-farm guarantee (and payment) is calculated as a weighted average for all crops (not on a crop-by-crop basis). Payments are made on a reduced 65% of base acres. V- b-y Co'., Producer elections varied widely across eligible program crops (Table 1). At the time that the 2014 farm bill was written, it was clear that ARC-CO would make significant payments through 2017, primarily because of high commodity prices during the 2012 to 2014 period, but that payments would decline substantially in later years as commodity prices subsided under productivity gains, assuming normal weather. As a result, producers of the two largest program crops-corn and soybeans-elected 93% and 97% of their respective base acres to participate in ARC-CO, making it the largest revenue program in terms of total base acres eligible for payments. Rice and peanut producers were nearly unanimous in selecting PLC. Few producers-1% of base acres-selected ARC-IC. Producers must meet eligibility requirements to participate in PLC and ARC and are subject to annual payment limits. (For details, see CRS Report R44739, U.S. Farm Program Eligibility and Payment Limits.) For more analysis on the farm safety net, see CRS In Focus IF10191, Overview of Farm Safety Net Programs; and CRS Report R44914, Farm Safety-Net Payments Under the 2014 Farm Bill: Comparison by Program Crop. .O w - - , gnom Nom , q > M 'M

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