Texas Tech University School of Agriculture in cooperation with Plains Cotton Growers and Texas A & M AgriLife Extension Service in Lubbock County hosted a Forum for Ag Producers in the area on the 2014 Farm Bill.
Dr. Darren Hudson, a professor at Texas Tech School of Agriculture. His research focuses on technology adoption, consumer issues, risk, policy and globalization/international trade. He gave a Basic Overview of the Farm Bill.
It was pointed out that the farm bill has been a work in progress since 2011 with Legislators working on the bill which was finally approved in early 2014.
Several Factors coming in to questions throughout farm bill–
SNAP Funding–Largely unchanged-there are a few changes in enrollment–expect some savings-roughly $8 Billion.
Dairy Program–Dairy Product Support and MILC program replaced with Dairy Production Margin Protection Program–No Supplemental control-producers elect coverage.
Payment Limits–Cannot Exceed 125,000 dollars per individual-$250,000 with spouse. There will be a separate limit for peanuts. Insurance payments not included in single payment limit.
Commodity Title Programs–
Direct Payments are now eliminated–except for Reduced Transfer Payments for cotton in 2014 and possibly in 2015. Funding has not been guaranteed for 2015. This payment is NOT a direct payment and is subject to detailed calculations. The payment will not be nearly as high as previous direct payments for 2014. Again 2015 is contigent on funding by government–likely not as STAX program will be introduced for cotton in 2015.
All producers of crops other than cotton must make a one time irrevocable decision to elect price loss coverage (PLC) or Ag Risk Coverage (ARC) on a County basis. Decision is on a crop by crop basis. Anyone who faces a financial loss on a farm is considered a producer and must make the same decision as other producers on same farm for programs. Note this decision is one time over life of farm bill. Neither program is a revenue program. PLC program can be combined with insurance programs.
It was pointed out that Farm Service Agency offices do not have the new rules and guidelines as of yet. It will likely be September-December before any signups can be done, however all programs will be retroactive.
Basic Summary on Program choices—
1) What are your price expectations
2) What is your farm to county yied correlations
3) Don’t forget to have landowner in agreement.
Jay Yates, Extension Economist with Texas A & M AgriLife Extension Service. He is a member of the FARM assistance team. Presented a presentation on Commodity Programs.
Livestock disaster assistance remains in place–all signups are retroactive to 2012 since previous farm bill with Livestock disaster assistance ended in 2011.
Crop Insurance Options–
Supplemental Coverage Option–Must be PLC signed up.
Coverage Level cannot exceed difference between 86% and covered level in individual policy.
Subsidy rate for SCO is 65%
County expense yields will be calculated using GRIP formula–(trend adjustment 20 yr. Avg.)
Not Available if enrolled in ARC.
Loss trigger is based on county loss or yield. No payment until after county yields for both irrigated and dryland have been determined. For Cotton that is likely June of the following year-other crops will be earlier.
Stacked Income Protection Plan (STAX) program for Cotton—
1) Stacked Income Protection Plan for cotton which operates similar to Supplemental Coverage Option—Will start in 2015.
2) Premium rates for both STAX and SCO will be much higher—however it will be 1st loss coverage .
3) STAX based entirely off county revenue. 90% revenue guarantee down to 70% or Insurance Coverage Level—80% premium subsidy and includes factor from 80% to 120%
4) STAX Subsidy Level is 80%
5) You can have both STAX and SCO on same farm but not on same acre.
6) Revenue guarantee estimate based off of expected insurance price.
7) Can be in addition to individual buy-up coverage or as a stand alone.
8) Differentiates between Irrigated and Dryland.
One of the differences between STAX and SCO is STAX can be a stand alone—SCO is always an add on to a multi-peril insurance policy. Examples were shown indicated that if the STAX program had been in place the past 13 years the average premium would have been nearly $2.00 less and it would have paid slightly more than SCO would and in the same years.
Other miscellaneous provisions which will take effect in 2015…..
Producers may exclude a crop year in which county planted acre yield was atleast 50%
Higher subsidy levels for insurance are becoming permenant.
Beginning farmers—(no active interest in an ag production operation for past 5 years)—eligible for 10% higher subsidy.
No payment limit on Insurance Subsidy
Requires participation in Conservation measures to receive subsidy
NAP coverage will be available to all uninsurable crops—other than forage.