Ag Policy Blog

Offering Advice on Farm Bill Choices

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Agricultural economists find themselves staring at plunging commodity prices and the myriad of farm-bill choices they helped craft.

The menu of options for farm programs and the one-time, irrevocable decisions mean economists are now faced with laying out potential program choices for farmers. Those recommendations could help farmers stay afloat during the price downturn or could translate into lost income if the wrong counsel leads producers to make the wrong decision over the five-year lifespan of the farm bill.

With a far more complicated farm bill, what constitutes sound advice to producers? That question hung out there at an Agricultural & Applied Economics Association meeting on the farm bill and crop insurance last week in Louisville, Ky.

"We have really got our work cut out for us on giving good advice," said John Anderson, an economist with the American Farm Bureau Federation.

Anderson noted that giving advice ought to be what agricultural economists do. Yet farm bills throughout history also have never given farmers so many program options. Generally, extension economists have been relied upon to walk farmers through how a program works and what is involved in sign up. Until the 2008 ACRE program, there were no options.

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This farm bill created an unprecedented number of decisions for landlords and farmers to make.

The downturn in prices just since spring muddies the waters. Several months ago, agricultural economists thought it was almost a no-brainer for corn and soybean farmers to sign up for the Agricultural Risk Coverage-County program. The payment benefits of ARC-County over Price Loss Coverage do not look so clear today as corn prices continue to decline.

Anderson raised the point of farmers facing "disparate outcomes" over the next few years. Two farmers could live across the road, face the same weather risks and receive the same prices, but program decisions could mean in three years that one farmer receives program payments while the other does not. How bad does it get if some farmers made the right call and others didn't?

That puts a lot of pressure on everyone advising farmers on enrollment decisions to get it right.

To have the best available information before making a program election, one belief is that farmers shouldn't making their program elections until March, which would be five months into the marketing year. If deadline for base-acre reallocation and yield update isn't until Feb. 27, 2015, that means the Farm Service Agency offices are going to be swamped with late business. The election decision between the two ARC options and PLC must be made by March 31.

A lot of effort has been put into the on-line decision tools created by different consortiums headed by the University of Illinois and Texas A&M University. Those two tools range greatly in complexity and details provided. Several other university extensions have put together decision tools that are crafted for specific states or crops as well.

USDA's webpage on ARC-PLC: http://www.fsa.usda.gov/…

Follow me on Twitter @ChrisClaytonDTN.

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Bonnie Dukowitz
10/12/2014 | 7:27 PM CDT
I think we will just continue doing the best we can, if the gov. sends a check, we will cash it.