Under the new farm bill, the direct payment system was eliminated. Under that system farmers paid the same amount no matter how much of their crops or livestock they lost.
An insured payment system replaced the old one. Farmers can choose to insure their crops on the Price Loss System, where they are refunded the price of the loss based on a price set by Congress. Farmers can pick and choose what crops they want to insure for a more cost-effective plan.
The other choice, called Adverse Risk Coverage, insures the entire farm but the payments are determined year-to-year by the yields of farms averaged across the state, not a set price like the PLC option.
President Barack Obama signed the $956 billion farm bill last February with support from both parties.
Bernard, an agriculture policy analyst, said farmers have to make an educated decision between the PLC and ARC plans, because they will be stuck with the choice until 2018.
Despite Bernard’s informative words, some local farmers are still confused on how the new farm bill will affect their work and lives.
Rob Humphries, co-owner of Wild Rose Farms and a host ofCorn Strategies 2014, said, “there’s a lot up in the air about the new farm bill that us as producers don’t have a full understanding of yet.”
“We’ve been worried about production on the farm here all spring,” Humphries said. “We’re going to have to readjust some of those things with the farm agency. We’re going to have to get busy on that before this fall.”
Brimfield farmer Grant Strom said crop insurance is the biggest factor coming out of the farm bill, so farmers are able to protect themselves if they have a bad season.
However, Strom, vice president of the Knox County Farm Bureau, is unsure about the mechanics of the decision he’s going to have to make.
“He (Roger) kind of reaffirmed how messed up some things in Washington are unfortunately but it’s interesting to see how things play out the rest of this year,” Strom said. “We don’t know enough about the complete focus of the bill to really be able to make proper decisions.”
Bernard said the first thing farmers should know to help them make an educated decision is their cost of production.
He said with that, farmers can use the online decision tools to help them figure out which option is best for them. The University of Illinois is a contributing school to these online decision tools, which Bernard said are going to be available to farmers soon.
Although the new law offers a safety net to farmers, Bernard said there’s a problem in its details.
According to Bernard, the data used to draft the bill and to calculate payments to farmers are based on two-year-old projections that ended up being wrong.
“You find out in a big hurry that projections are fraught with peril,” Bernard said. “When we started into this process, they were using the budget baseline numbers from a year ago when they first started working on the farm bill and that gave them a different picture than what the bill is scored against once it became law.”
Bernard said the discrepancy in the numbers was partially influenced by the draught in 2012.
Source - http://www.galesburg.com/
