Purdue Ag Economist Offers Insights Into U.S. Farm Bill

A Purdue Extension agricultural economist published two articles that outline what the 2014 farm bill could mean for farmers and agriculture in the Midwest, announced Purdue University.

The Agriculture Act of 2014 was signed into law in February, but many of its specific rules are left to the U.S. Department of Agriculture to interpret and implement. Associate Professor Roman Keeney ’s articles explain how the farm bill has changed agricultural policy, outlines the new farm revenue protection programs, and helps farmers evaluate their program decisions.

One of the biggest changes farmers will see is elimination of the longstanding direct and countercyclical payments system, Keeney wrote. Instead, he said, lawmakers decided to offer farmers a more robust insurance and revenue protection system.

He also noted that farmers’ revenue protection program decisions are especially important because they lock farmers into their enrollment choices for the farm bill’s five-year life, which runs through 2018.

The programs offered are:

• Price Loss Coverage (PLC), a price protection program that triggers payments when market year average prices fall below target levels, which are called reference prices.
• Agricultural Risk Coverage County (ARC-C), a revenue protection program that triggers payments when the county revenue per acre falls below a benchmark revenue guarantee per acre set for the county.
• Agricultural Risk Coverage Individual (ARC-I), a revenue protection program that triggers payments when there is a revenue-per-acre shortfall on the individual farm that falls below a benchmark revenue guarantee per acre for that farm.

Farmers will be able to enroll different commodities into different programs, and some additional options will be available with all three programs, as highlighted in Keeney’s articles. The USDA is expected to interpret the remainder of the farm bill rules this summer, giving farmers time to learn more before the enrollment period later this year.

The articles, “What Will the 2014 Farm Bill Mean for Midwest Agriculture?” and “Beginning to Evaluate Choices in the Farm Bill,” are available for download free of charge in the most recent edition of the Purdue Agricultural Economics Report. bit.ly/purdue_paper