2018 Farm Bill Improves Agriculture Risk Coverage Program

(WASHINGTON, DC) There were a number of subtle changes to the Agriculture Risk Coverage (ARC) program in the new 2018 Farm Bill. According to the American Farm Bureau Federation (AFBF), both the price and yield calculations will improve revenue support. First, by allowing Price Loss Coverage (PLC) reference prices to float higher, the plug prices under ARC are also allowed to float. As a result, benchmark prices can be no lower than the maximum of the statutory reference price or 85 percent of the Olympic moving average. Second, under the historical ARC provisions, the plug yield was 70 percent of the county’s transitional yield. The farm bill changes the plug yield in the ARC benchmark revenue calculation to be no lower than 80 percent of the county’s transitional yield. This change will increase the benchmark revenue guarantee for growers in many counties that experienced below average crop yields in recent years. Third, USDA’s Risk Management Agency (RMA) trend-adjusted yield factors will be incorporated into a benchmark and actual yield calculations. In many cases, trend-adjusted yield factors will increase crop yields to reflect productivity improvements. Finally, data from the RMA crop insurance program will be the primary source of yield data as opposed to USDA’s National Agricultural Statistics Service yield surveys. This change is designed to improve the integrity of the ARC program by using an average of county-level crop yields reported to RMA.