SENATE AG COMMITTEE UNVEILS ARC PROGRAM IMPROVEMENTS

Lindsay Mitchell

Apr, 25, 2018  |  Today's News |  Legislation & Regulation |  Farm Policy

Senator John Thune of South Dakota and Senator Sherrod Brown of Ohio released a bipartisan piece of legislation today that would improve the Agriculture Risk Coverage (ARC) program in the next farm bill.  The Illinois Corn Growers Association supports this proposed legislation.

 

The ARC Improvement and Innovation Act would:

  • Use Thune’s previously introduced proposal (S. 1259) to calculate payments based on a county’s physical location.
  • Equalize the commodity title programs’ payment structure by capping reference prices at either their current level or no more than the 10-year average price for a commodity.
  • Adjust ARC to have a coverage level of 90 percent instead of 86 percent.
  • Use a three-year average price with a 10-year average market price as a floor for calculating ARC payments.
  • Use a crop insurance trend-adjusted yield factor to calculate the ARC benchmark yield.
  • Use an 80 percent T-yield for substitute yields if historical yields are missing or lower than 80 percent (current  
  • T-yield substitution factor is 70 percent).
  • Continues to include the ARC individual option, which was removed in the House farm bill.
  • Include a quality adjustment factor that could be used to calculate ARC wheat payments, when needed.

 

Many of these proposed program changes began with recommendations from U.S. corn farmers via the National Corn Growers Association Risk Management Action Team (RMAT).  The RMAT’s goal was to improve the ARC program’s effectiveness in a lower price environment.

 

“Due to back-to-back years of low commodity prices, the ARC formula, in its current form, is no longer working as effectively as it should for the more than 90 percent of South Dakota farmers who have successfully used ARC as a safety net option,” said Thune. “The common-sense changes we’ve proposed are necessary to help make ARC work to its full potential for the vast majority of corn and soybean producers who are enrolled in the program around the country.”

 

“Ohio farmers need effective risk management tools — particularly when facing several years of low commodity prices. It’s time we update the ARC program so that it better protects against both price and yield disasters,” said Brown. “The improvements in this bill will better protect Ohio soybean and corn growers from risks outside their control. This bipartisan bill builds on the reforms of the 2014 Farm Bill and is good for farmers and good for taxpayers.”

 

Click here for more information on the ARC Improvement and Innovation Act, including a more in-depth explanation of the modification to the payment calculation.