1. 2013 Farm Bill ISU Extension Farm Management In-service Nashua, Iowa
May 20, 2013
Chad Hart
Associate Professor/Crop Markets Specialist 1 1

2. Farm Bill Progress?
House and Senate have basically revived their packages from last year
A couple of new wrinkles have been added to address specific crop concerns
Like last year, the key will be the floor vote in the House (which didn’t happen last year)

3. Ideas on the Next Farm Bill
Let’s look at the common features
Both versions of the farm bill eliminate direct payments, countercyclical payments, ACRE, and SURE
The marketing loan program would continue
Livestock disaster programs would be reestablished

4. Reference Prices Senate: 55% of 5-yr Olympic average MYA price
House: Set by law
Corn $3.70
Wheat $5.50
Soybean $8.40
Corn
$2.95
Wheat
$3.62
Soybean
$6.29

5. ARC or RLC instead of ACRE
Revenue-based support program
Revenues based on 5-year Olympic averages for yields and prices
Yields and prices have cups (T-yields and reference prices)

6. Revenue Programs Senate House ARC-County ARC-Farm RLC Payment acres
Planted and prevented
(up to Base)
85% of Planted (up to Base)
Benchmark revenue
5-yr OA county yield * 5-yr OA MYA price
5-yr OA farm yield * 5-yr OA MYA price
Actual revenue
County yield * Max(MYA price or loan rate)
Farm yield * Max(MYA price or loan rate)
County yield * Max(midseason price or loan rate)
Revenue guarantee
88% of benchmark
85% of benchmark

7. Revenue Programs Senate House ARC-County ARC-Farm RLC Payment rate
Min(Guarantee – Actual revenue, 10% of benchmark)
Payment made on
80% of planted acres and 45% of prevented acres
65% of planted acres and 45% of prevented acres
Payment acres

8. AMP or PLC instead of CCP
Price-based support program
Reference prices establish targets
Works like CCP
Payment rate = Max(0, Reference price – Max(MYA price, Loan rate))

9. Price Programs Senate House AMP RLC Payment acres 85% of Base acres
85% of Planted
(up to Base)
Payment yield
CCP yields
CCP yields w/ updating

10. Dairy Dairy Producer Margin Protection Program
Voluntary margin coverage, with the opportunity for supplemental coverage
Dairy Market Stabilization Program
Managed supplies when margins fall
Packages are very similar across the House and Senate versions

11. Supplemental Coverage Option (SCO)
An additional policy to cover “shallow losses”
Shallow loss = part of the deductible on the producer’s underlying crop insurance policy
SCO is county-level yield or revenue policy
Indemnities are paid when the county experiences losses greater than 10% of the expected yield or revenue level, but payments are not more than the original deductible

12. SCO Examples from Last Year’s Bills
Source: Congressional Research Service

13. Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: