Farm Bill - Whats it mean?

West Texas Farmers - What does the Farm Bill mean to you. 

2014 - Cotton will receive a Transitional Direct Payment - Since STAX will not be fully available until 2015. 

2014 - Wheat, Corn, Soybeans & Grain Sorghum - You will sign up for PLC or ARC it is a one time decision thru 2018. 


Farm Program Update 

Cotton went all in on Crop Insurance in this Farm Bill.  In an effort to get out from under the Brazil WTO challenge, Cotton will not be eligible for PLC or ARC ( which are new FSA delivered Countercyclical Policies).  Cotton producers will be eligible for STAX( Stacked Income Protection Program).  Stax is an area wide crop insurance policy that will cover from 90-70%. It will be offered in 5% increments and subsidized at 80%, and have a 120% multiplier.  

Stax is suppose to be available for 2015, so in the meantime Cotton producers will recieve a "transitional payment" for 2014 which will be comparable to a direct payment. 

Since PLC and ARC will still be paid on historic base acres, cotton base acres will be deemed "generic base" and will follow what the farmer plants.  So if the farmer plants cotton on his generic base acres, he will get STAX.  If he plants corn on the cotton base acres, he will get either PLC or ARC for corn ( same is true for sorghum or other commodities). On the con-cotton base acres, the farmer will receive the corn/sorghum/ etc. benefits from PLC or ARC, but may also recieve STAX cvoerage if he plants cotton.  

What is PLC - Price Loss Coverage 

The PLC plan was developed by the house, uses reference prices, formerly known as target prices, and payments would occur if the average market price for the crop year is less than the reference price. Those prices are $5.50 for wehat, $3.70 for corn, and $8.40 for soybeans.  While those may seem low for Cornbelt farmers, the reference prices for southern commodities are relatively higher, making it more appealing to the Crops, of Milo, and Wheat.

WHat is ARC - Agricultural Risk Coverage 

The ARC plan, developed by the Senate, may be a more preferred program for Cornbelt producers.  Payments would occur when actual crop revenue is below the ARC guarantee for the crop year, and that guarantee is 86% of the county-based yield formula multiplied by a national average price.  The ARC payment is based on national average prices over the prior five years with the high and low descarded. While the FSA office will retain the base acres for the farm, operators will be able to shift cropbases due to recent planting trends if desired.