Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Wednesday 12/11/13

The Truest Farm Bill Acronym, AMOCC

At one time, a former chief economist at USDA characterized farm programs being debated in Congress as "A Multiplicity of Confused Concepts," which translated into the acronym AMOCC.

Brad Lubben, an extension economist at the University of Nebraska, told farmers at the DTN/The Progressive Farmer Ag Summit that it's time to revive AMOCC for the current farm-bill debate and safety net options.

The bill has been debated at a time of record farm income. Farm bills are a produce of the times. The times now emphasize reducing budget costs.

Once a final bill is passed, farmers are going to have to make a series of decisions based on farm level crop insurance, farm, county or national level commodity program and county level crop insurance add-ons. Potentially, these decisions could protect farm income up to 90% levels. However, "They are all tied to something different," Lubben said.

So both the House and Senate bills, as we move to potentially final conference talks, layer in farm, county and national income or price policies.

Up until now, a farmer has bought one crop-insurance policy that covers the farm or pays on an average of the county yield. Under both versions of the farm bill, a produce will now be able to buy individual coverage up to a protection level, then stack the a countywide program on it, the Supplemental Coverage Option, or SCO.

Crop insurance is key," Lubben said. "This bill is about crop insurance."

When it comes to commodity programs, so much debate is based has been based on the target price programs, particularly in the House bill. That's largely because the Senate bill would only pay on an average of 55% of the price over the last five years. The Senate's Average Market Price program, or AMP, "is low enough to potentially never take effect."

Another concern is potential overlap of payments of the various programs, but looking at a representative farm in Nebraska, Lubben said the risk of payment overlap is minimal "We don't actually see much overlap."

Instead, the concern could be as a farmer is choosing crop insurance and deciding which commodity program to enroll in that it could leave holes in protection levels. A producer would buy individual coverage to 75%, and then SCO coverage to protect another band of income levels --- assuming the county revenue is affected. Then if a producer enrolls in the target-price program, a payment would only trigger based on a long-term decline in the commodity price.

"Producers are going to have to look at all of these various scenarios and decide how the pieces of the puzzle fit together," Lubben said.

While the bills also may be AMOCC, that also doesn't even factor in the rules that will be crafted for these programs and insurance options at USDA. The agency gets its chance to add to the complexity as well.

If you recall, way back in 2010 and 2011 when the House and Senate Agriculture Committees were revisiting the 2008 bill, one of the biggest complaints about the Average Crop Revenue Election program, or ACRE, was that it was just too complex. Farmers needed simpler options.

Follow me on Twitter @ChrisClaytonDTN.

Posted at 6:51AM CST 12/11/13 by Chris Clayton
Comments (3)
More government schemes that target government benefits of the greatest value to the largest operations.
Posted by Sally Benson at 7:25AM CST 12/11/13
Sally ;if that is all you can add please stop or sign your blog as Heritage EWG API. You contribute nothing. Some of us are real farmers .
Posted by melvin meister at 9:12PM CST 12/11/13
Why Melvin are you so fixated in removing small farmers from US agriculture? Just because some of us are small farmers does not mean we are not real l farmers.
Posted by Sally Benson at 6:52AM CST 12/12/13
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