From Gary Schnitkey at IL extension, a
summary of the Agricultural Risk Coverage program in the Senate Ag's bill:
Summary
ARC will make payments if revenues reach lower levels. In years in
which revenue declines, ARC payments will be useful to farmers.
ARC payments will offset some of the losses in gross revenue. The
entire loss will not be covered because 1) the .89 factor used to
calculate the guarantee effectively puts an 11% deductible on revenue
losses, 2) payments are a factor of the shortfall (.80 for the county
program and .65 for the farm program), and 3) ARC payments are capped at
10% of benchmark revenue.
If prices are persistently low for several years, ARC payments will
decline over time as lower prices enter into the calculation of
benchmark revenue. Hence, ARC will provide payments in early years of a
multi-year price decline, eventually though farmers will need to fully
adjust to price declines as ARC payment decline.
A couple of thoughts:
- there's a cap on the acres (average of plantings 2004-8) which presumably could replace the acreage base, but may involve such things as: the initial establishment and the right to appeal, and the problems of handling prevented planting, CRP acreage, rotations, and changes from one crop to another. Reminds me of the days of establishing NCA's and acreage bases.
- interesting issue on collecting data--do you collect production data for every participant every year, or only if there's a possibility/probability of qualifying for ARC payment?
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