Sens. Brown, Thune Introduce Bipartisan Legislation to Improve the Agriculture Risk Coverage Program
Today,
By providing more equitable support prices that are reflective of the actual market value for all crops and using a 10-year market price average as a cap on reference prices, the Brown-Thune bill would take an important step toward ensuring farm programs are more fiscally responsible for taxpayers. The bill would also ensure that payments are not being made for base acres on land that is no longer being planted with commodity crops. Beginning farmers would, for the first time since 2002, have a new opportunity, based on planting history, to become eligible for new or additional base acres on certain farms that were previously ineligible or only eligible for limited commodity program assistance.
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"Due to back-to-back years of low commodity prices, the ARC formula, in its current form, is no longer working as effectively as it should for the more than 90 percent of
"The Agriculture Risk Coverage Improvement and Innovation Act will make needed improvements to the farm safety net, ensuring ARC can continue to be a reliable risk management program for farmers during times of depressed prices," said
While ARC and the Price Loss Coverage (PLC) Program are both farm bill commodity crop safety net programs, PLC only calculates safety net assistance based on price. An effective ARC program is a critically important safety net component for producers in many states, as it provides coverage for both price and production losses for individuals or county-wide losses, depending on whether "ARC individual" or "ARC county" coverage is selected by the farmer.
The bill would accomplish the following:
* Use Thune's previously introduced proposal (S. 1259) to calculate payments based on a county's physical location.
* Equalize the commodity title programs' payment structure by capping reference prices at either their current level or no more than the 10-year average price for a commodity.
* Adjust ARC to have a coverage level of 90 percent instead of 86 percent.
* Use a three-year average price with a 10-year average market price as a floor for calculating ARC payments.
* Use a crop insurance trend-adjusted yield factor to calculate the ARC benchmark yield.
* Use an 80 percent T-yield for substitute yields if historical yields are missing or lower than 80 percent (current T-yield substitution factor is 70 percent).
* Continues to include the ARC individual option, which was removed in the House farm bill.
* Include a quality adjustment factor that could be used to calculate ARC wheat payments, when needed.
In 2011, Brown, Thune, Sen.
Click here (https://www.thune.senate.gov/public/_cache/files/e2812c35-5b3f-47ae-8fe9-79176d778486/D1D88A8A74FB75FA63C99E47FAE7EE18.the-final-final.pdf) for more information on the ARC Improvement and Innovation Act, including a more in-depth explanation of the modification to the payment calculation.
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