Farm Bureau Supports Farm Program Fix

Newsroom / October 24, 2017

The American Farm Bureau Federation and seven other major farm groups today hailed introduction of bipartisan legislation to improve the Agriculture Risk Coverage program, an important component of the federal agricultural safety net for farmers. Senators Heidi Heitkamp and Joni Ernst are sponsors.

Among other things, the bill would prioritize use of data collected from USDA’s Risk Management Agency to calculate crop yields. The measure also 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. It also would allow state Farm Service Agency committees to adjust yield estimates when results are inexplicably different compared to neighboring counties within the same state or adjacent counties across state lines.

Text of the letter follows:                                    

October 24, 2017

 

Senator Heidi Heitkamp

516 Hart Senate Office Building

US Senate

Washington, DC  20510

 

Senator Joni Ernst

111 Russell Senate Office Building

US Senate

Washington, DC  20510

 

Dear Senators Heitkamp and Ernst,

The following farm and commodity groups wish to express our appreciation and support for the legislation you introduced to improve the Agriculture Risk Coverage (ARC) program.

The bill accomplishes this goal by (a) directing USDA to use the more widely-available data from the Risk Management Agency (RMA) as the first choice in yield calculations; (b) calculating safety net payments based on a farm’s physical location, rather than using the antiquated administrative county that may not be representative of a farmer’s land; and (c) providing FSA state committees discretion to adjust yield data estimates to help reduce inexplicable variation between neighboring counties or along boundaries with neighboring states.  Appropriate adjustments would be made prior to yields being finalized or published.

The 2014 Farm Bill allowed the U.S. Department of Agriculture (USDA) to determine how county yields would be established for the ARC program. USDA decided to use data sources via a cascade in the following priority order: National Agriculture Statistics Service (NASS), Risk Management Agency (RMA) and yields calculated by the state Farm Service Agency (FSA) office. NASS and RMA yield data comprise about 90 percent of the base acres enrolled in ARC-County (ARC-CO). The remaining 10 percent is compiled by the state FSA office.

It is important to note that a study conducted for the National Corn Growers Association on the impacts on payments to corn producers indicates that there is not likely to be a significant difference in the ARC-CO payments on a national basis simply due to changing the order in the cascade. A study by Dr. Keith Coble of Mississippi State University indicated similar results.  There will be county winners and county losers. 

What is important, however, is that the program would be based on more defensible data if RMA yields are used. We believe this is true because:

--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 comes from actual production history;

--there is no penalty for failure to fill out a NASS survey or misreport submitted information.  However, farmers may face criminal penalties for filing an inaccurate crop production report for RMA; and

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

We are also quite supportive of your provision to calculate ARC-CO payments using the ARC-CO payment rate for the county in which the land is physically located rather than the rate for the administrative county used by the farmer.

Farm operators that have land in multiple counties may handle all their FSA work administratively through one county (the administrative county). Farmers 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. 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, USDA made an administrative decision to allow ARC-CO participants with land physically located in a county with a higher ARC-CO payment than the administrative county to receive ARC-CO payments calculated according to the higher-paying county payment rate. USDA does not require ARC-CO participants with multi-county farms to be paid at the lower ARC-CO 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. We heard far more about discrepancies between county payments than any other issue in the ARC program and believe this will make the program function even better in the future.

Again, we appreciate your leadership on these important issues and look forward to working with you to ensure they are included in the next farm bill.

Sincerely,

American Farm Bureau Federation

American Soybean Association

National Association of Wheat Growers

National Corn Growers Association

National Farmers Union

National Sunflower Association

USA Dry Pea & Lentil Council

US Canola Association

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