- There seems to be few concrete answers about what Congress will do to address the farm bill situation when lawmakers return from August recess.
- With a national election season in full swing there is little chance for House farm bill action.
On the Senate farm bill…
“The Senate farm bill doesn’t have anything like the PLC proposal. It has the ARC – Agricultural Risk Coverage – program, which is often called a ‘shallow loss program.’
“ARC makes payments when revenues on a farm or in a county fall below 89 percent of a recent average. That program would provide benefits to producers whenever revenues turn down from recent averages. That’s true whether, or not, you’re starting with very high levels of revenue or very low levels. So, it might pay out in different circumstances than would the PLC.
“The House bill also has a similar Revenue Loss Coverage (RLC) program, but PLC is likely to be the more attractive option for most producers under the House bill.
“Given the particular parameters they picked for those programs, we estimate that you’d probably get more in payments under the House bill if you’re a barley, rice, peanuts or wheat producer. You’d get comparable, or a bit more in payments, under the Senate bill if you’re a corn or soybean producer, on average.”
The Supplemental Coverage Option as wild-card…
“There is one very big wild-card in all this: the Supplemental Coverage Option (SCO). It’s referred to in both bills, but under different rules.
“It’s gotten some attention but perhaps not as much as it deserves given how important it is. SCO is a program you’ll have to pay a premium for in exchange for which you could cover a lot of what would otherwise be a deductible.
“In the Senate bill, if you participate in the ARC program you can only get SCO benefits covering losses in excess of 21 percent. If you don’t participate in ARC, you can have the SCO coverage for losses in excess of 10 percent out-of-pocket.
“On the House side, you can choose to participate in both PLC and SCO. SCO, but you cannot sign up for both RLC and SCO for a particular crop.
“It appears that the choice between ARC and the SCO on the Senate side is a relatively close call. However, we think many people will take ARC if they’re presented with the Senate package because the average payments might be a few dollars higher in most cases. Plus, you wouldn’t have to pay a premium up front.
“On the House side, the combination of PLC and SCO looks pretty attractive – even in corn and soybean country where it could be a good alternative to the RLC program that the House bill offers.
“In our basic analysis of the House bill, we assumed that half of the producers who sign up for PLC also would take SCO. However, we recognize that for producers trying to maximize their payments over time it would make sense for most of them to participate in SCO.
“We also looked at the extreme alternative where everyone participated in the House’s PLC and SCO programs. That results in more benefits to producers, but it would also increase budgetary outlays by taxpayers well above the levels estimated in our basic analysis of the bill and also well above levels estimated by CBO (Congressional Budget Office).”