Author: Bart Fischer

For the 2022 crop year, producers will have several decisions to make over the next few months.  For example, the U.S. Department of Agriculture’s Farm Service Agency (FSA) has announced that producers will have until March 15, 2022, to make their Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) elections and enrollments for the 2022 crop year.  In addition, many of the sales closing dates for crop insurance for spring-planted crops are rapidly approaching.

For the ARC-County (ARC-CO) and PLC decision, the Agricultural & Food Policy Center (AFPC) at Texas A&M University provides a decision tool to evaluate the trade-offs between the two programs on a crop-by-crop and farm-by-farm basis.  AFPC also offers a spreadsheet calculator for producers who are considering ARC-Individual (ARC-IC).  Given the current price outlook – where producers may expect to receive little (or no) assistance from ARC and PLC – it arguably makes the crop insurance coverage decisions even more important.  

To that end, we offer the following “rules of thumb” for you to consider as you make farm safety net decisions for the 2022 crop year:

• Similar to the 2021 crop year, ARC and PLC are less likely to pay.  That’s okay!  Most producers tell us they would rather get their income from the market than the government anyway. 
• Rather than focusing on expected ARC/PLC payments (when neither may trigger), consider instead where you are most vulnerable.  Is it lower prices due to trade disruptions or slow economic recovery?  Is it lower yields due to persistent drought?
• Talk to your crop insurance agent to make sure you’ve evaluated all yield enhancement options (e.g., Yield Exclusion) and unit structures.
• With current price elections on crop insurance, perhaps now is the time to focus more on adding area-wide tools like the Stacked Income Protection Plan (STAX) for upland cotton, the Supplemental Coverage Option (SCO), and the Enhanced Coverage Option (ECO).
  • You can have STAX on a farm if the seed cotton base on the farm is not enrolled in ARC/PLC.
  • You can purchase SCO for a crop on a farm as long as it’s not enrolled in ARC.
  • You can purchase ECO on the farm regardless of ARC/PLC enrollment.
• At a minimum, on farms with little (or no) seed cotton base, be sure to take a close look at area-wide policies like STAX.  
• If your APH is relatively higher than the county average yields, then be sure to compare STAX against both SCO and ECO.  Because of the 10% limitation in ARC, you may find SCO to be a more attractive alternative (and PLC can be utilized as well, providing some downside price protection, even if you do not expect to need it).

Fischer, Bart, and J. Marc Raulston. “2022 Farm Safety Net Decisions“. Southern Ag Today 2(2.4). January 6, 2022. Permalink

Congress is rushing to finish up its year-end work.  President Biden has already signed the continuing resolution to fund most of the Federal government through February 18, 2022, and Congress has now reached agreement on other priorities like the National Defense Authorization Act and raising the debt ceiling.  Reaching agreement on the Build Back Better Act (BBBA) – which passed the U.S. House of Representatives on November 19, 2021 – has proven to be more elusive.

While the BBBA touches on a number of different topics – falling mostly under the banner of “human infrastructure” – most of the agriculture-related provisions are tied to addressing climate change.  As noted in Figure 1, the bill dedicates an estimated $76.9 billion in spending on agriculture-related priorities over the next 10 years.  For example, $26 billion is provided for forestry activities, most of which is for forest restoration and fuels reduction projects.  Another $25.3 billion is provided for a number of rural development priorities, including $6.6 billion for a “fix” to the debt relief for socially disadvantaged producers provision from the American Rescue Plan (which has run into a number of constitutional challenges in the courts).  Perhaps most notably, the bill also includes $23.5 billion for conservation, with $5 billion going to cover crops and most of the remainder going to temporary plus-ups for existing conservation programs.

The path forward for the BBBA is not clear.  Even if the Senate reaches agreement before the end of the calendar year, they may very well amend the bill which will require the House to weigh in again.  Finally, even if the bill does become law, the temporary nature of the funding increases on the agriculture-related provisions may very well add to the complications that Congressional negotiators will face as they write the next farm bill.

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Fischer, Bart. “Build Back Better?” Southern Ag Today 1(50.4). December 9, 2021. Permalink