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1 [1] (April 3, 2019)

handle is hein.crs/govzaq0001 and id is 1 raw text is: CogEssoa Reeac Seric 0 April 3, 2019 2018 Farm Bill Primer: Title I Commodity Programs Background Commodity programs have historically been an essential part of U.S. farm policy by virtue of their long history (dating back to the 1930s) of providing various forms of revenue support. However, the specific program design and the list of eligible commodities have varied over time with changing market and policy conditions. Provisions of Title I, the Commodity Title, of the 2018 farm bill (Agricultural Improvement Act of 2018, P.L. 115- 334) authorize current commodity revenue support programs for crop years 2019-2023. (For details, see CRS Report R45525, The 2018 Farm Bill (P.L. 115-334): Summary and Side-by-Side Comparison.) U.S. Department of Agriculture (USDA) commodity programs are funded through the Commodity Credit Corporation. (For details, see CRS Report R44606, The Commodity Credit Corporation: In Brief.) Producers must meet eligibility requirements to participate in the Title I commodity programs and are subject to annual payment limits. (For details, see CRS Report R44739, U.S. Farm Program Eligibility and Payment Limits.) Two Tiers of Market-Based Support There are two tiers of revenue protection for program commodities: the lower marketing assistance loan (MAL) program and the higher Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs. Not all commodities are eligible for all programs (Table 1). Tier 1: Market Assistance Loan (MAL) Program First-tier revenue protection is available under the MAL program, which offers producers a commodity-specific, statutorily fixed loan rate that is available for all production of eligible commodities (referred to as loan crops). A participating producer may put a harvested loan crop under a nine-month, nonrecourse loan valued at the statutory commodity loan rate. For a nonrecourse loan, USDA must accept the crop as full payment for the loan if a producer forfeits. The loan uses the crop as collateral (thus coupling MAL benefits to current production), and the loan rate, in effect, establishes a price guarantee. If local market prices increase above the loan rate (plus interest), a producer may repay the MAL and reclaim the crop. If market prices are below the loan rate, then other program options are available to producers, including repayment of the loan at a USDA-announced lower rate, forfeiture of the crop, or taking a loan deficiency payment in lieu of an MAL. (See CRS In Focus IF10714, Farm Bill Primer: The Marketing Assistance Loan Program.) Tier II: ARC and PLC Programs A second, higher tier of support is available under the PLC and ARC programs. Producers choose between PLC and ARC depending on their preference for protection against a decline in (a) crop prices or (b) crop revenue, respectively. PLC provides price protection based on reference prices set in statute at levels above the MAL loan rates. The 2018 farm bill added an escalator provision that could potentially raise a covered commodity's effective reference price to as much as 115% of the statutory PLC reference price. ARC provides revenue protection based on the product of five- year moving averages of both historical county yields and the higher of national average annual farm prices or the PLC effective reference price. (See Table 1 for a list of MAL loan rates and PLC reference prices compared with average farm prices for eligible program commodities.) In contrast to MAL benefits, which are linked to current production, ARC and PLC make payments based on a portion (85%) of historical farm program acres-known as base acres-and are therefore decoupled from producer production choices. Alternatively, instead of choosing commodity-specific PLC and ARC, a farmer could choose to combine all covered commodities into a single, whole-farm revenue guarantee under the farm-level individual ARC (ARC-IC) program. (For details, see CRS In Focus IF10711, Farm Bill Primer: ARC and PLC Support Programs.) The 2018 farm bill allows producers flexibility in their program choices. In 2019 producers may select ARC or PLC coverage, on a commodity-by-commodity basis, effective for both 2019 and 2020. If no initial choice is made, then the default is whichever program was in effect under the 2014 farm bill. Then, beginning in 2021, producers again choose between ARC and PLC annually for each of 2021, 2022, and 2023. In addition, producers may now remotely and electronically sign annual or multi- year contracts for ARC and PLC. Eligible Program Commodities Commodities eligible for the MAL loan program include most major field crops as well as wool, mohair, and honey. A smaller subset of commodities-which excludes cotton, wool, mohair, and honey-is defined by the 2018 farm bill as covered commodities eligible for the ARC and PLC programs (Table 1). The mix of supported crops reflects historical policy goals and compromises that have evolved over the decades. Producers of specialty crops (e.g., fruits, vegetables, and tree nuts) and livestock have generally received little or no direct government price or revenue support through commodity programs. Dairy, Sugar, and Disaster Programs Title I authorizes separate programs for dairy and sugar (CRS Report R45525, The 2018 Farm Bill (P.L. 115-334): Summary and Side-by-Side Comparison). Title I also includes disaster assistance programs focused on livestock and tree crops that were permanently authorized by the 2014 farm bill and the noninsured disaster assistance program (NAP) for commodities not eligible for crop https:I/crsreports.conc -- -q

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