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Major farm groups support changes to ag risk program


WASHINGTON, D.C. — The American Farm Bureau Federation (AFBF) is among several national farm groups backing legislation they say would improve the USDA-Farm Service Agency’s (FSA) Agricultural Risk Coverage (ARC) program.

“The three things that are covered in this bill we believe provide us a really good opportunity to fix something that we’ve heard a lot about,” said Mary Kay Thatcher, AFBF Congressional Relations director.

Under the Agricultural Risk Coverage-County (ARC-CO) Improvement Act (S. 1998), the USDA will be directed to: use more widely available data from the Risk Management Agency (RMA) as the first choice in yield calculations; calculate safety net payments based on the county where a farm is physically located; and provide the FSA state committee discretion to adjust yield data estimates to help reduce variations in yields and payments between neighboring counties.

“A lot of farmers are talking about the discrepancy in payments between counties, and also talking about what kind of data were being using,” Thatcher said. “I think using the RMA, the crop insurance data, is the first choice, rather than using NASS (National Agricultural Statistics Service) data.”

Introduced by Sens. Joni Ernst (R-Iowa) and Heidi Heitkamp (D-N.D.), the proposed bill would require the USDA to calculate safety net payments based on a farm’s physical location – changes Thatcher said should help ensure farmers a strong safety net moving forward.

“It’s important to have a safety net when farmers are having to deal with difficult times,” she said. “Certainly, we are looking at an economy around the world that’s not doing all that great, so we need to make sure that there is a safety net there for farmers.”

In an Oct. 24 letter to Ernst and Heitkamp, the AFBF joined the American Soybean Assoc. (ASA), National Assoc. of Wheat Growers, National Corn Growers Assoc. (NCGA), National Farmers Union, National Sunflower Assoc., USA Dry Pea & Lentil Council and U.S. Canola Assoc. in support of the proposed bill.

“The ARC-CO is of great importance to soy growers, who signed up over 90 percent of soybean acres in the program,” said Ron Moore, ASA president and Roseville, Ill., grower. “In hard economic times, finding the best way to provide support against declines in farm revenue is on every grower’s mind.”

The groups told the senators the bill would prioritize use of data collected from the RMA to calculate crop yields. In addition, they said the measure would use data from the county in which a farm is located when calculating yields, rather than allowing farmers to use yield data from their administrative counties if they farm in more than one county.

Moreover, it would allow state FSA committees to adjust yield estimates when results are inexplicably different compared to neighboring counties within the same state or adjacent counties across state lines.

According to the AFBF, the 2014 farm bill allowed the USDA to determine how county yields would be established for the ARC program. The USDA decided to use data sources via a cascade in the following priority order: the NASS, RMA and yields calculated by a state FSA office.

The NASS and RMA yield data comprise about 90 percent of the base acres enrolled in ARC-CO, with the remaining 10 percent compiled by the state FSA offices. A study conducted for the NCGA on the impacts on payments to corn producers indicated there isn’t likely to be a significant difference in the ARC-CO payments on a national basis simply due to changing the order in the cascade.

“The NCGA believes the ARC-CO can be updated to improve its effectiveness in this extended low-price environment farmers are facing,” said Kevin Skunes, group president. “The NCGA supports a program that utilizes more accurate data to ensure farmers have access to fair and accurate risk management tools.”

The farm groups said what is important is that the revamped ARC-CO program would be based on more defensible data if RMA yields are used, namely since:

•Only about 60 percent of producers return NASS surveys, so it is difficult to assume accuracy of the data

•The NASS yield estimate comes from producer surveys and the RMA yield data come from actual production history

•There is no penalty for failure to fill out an NASS survey or misreporting submitted information; however, farmers may face criminal penalties for filing an inaccurate crop production report for the RMA

•The RMA reports all its county yields as irrigated or non-irrigated, whereas NASS does not

The farm groups told the senators farm operators who have land in multiple counties could do all their FSA work administratively through one county (the administrative county) – especially since growers only had two options for calculation of ARC-CO payments for 2014 and 2015.

“They could be paid on where the land was located, or based on their administrative county,” they stated. “When ARC-CO payments are determined using the administrative county’s payment rate for multi-county farms, ARC-CO payments may be higher or lower than if the payments were calculated using the payment rate for the county in which the land is physically located.”

In early 2016, the USDA decided to allow ARC-CO participants with land physically located in a county with a higher ARC-CO payment than the administrative county to receive payments calculated according to the higher-paying county rate.

Currently, the USDA doesn’t require ARC-CO participants with multi-county farms to be paid at the lower payment rate if any of the land in the farm is physically located in a lower-paying county than the administrative county.

“Your final provision allows for providing FSA state committees discretion to adjust yield data estimates to help reduce inexplicable variation between neighboring counties or along boundaries with neighboring states,” the farm groups stated.

“We heard far more about discrepancies between county payments than any other issue in the ARC-CO program, and believe this will make the program function even better in the future.”

Thatcher said committee markup of the next farm bill may start soon, but the bulk of its work isn’t likely until early next year, adding the budget is quite limited. “We have 37 programs that are funded now that won’t be funded, so we have to worry about how we can get some of those back into the program.

“We are going to have to be as efficient as we can with money to try and get a well-rounded bill that we can pass through the House and the Senate, and have the President sign (it),” she added.