What is in this article?:
- How does the farm bill change crop insurance?
- Farm bill adds new insurance products
- Price Loss Coverage program makes a payment when the market price for a covered crop is below a fixed reference price.
- Agriculture Risk Protection makes a payment when either the farm’s revenue from all crops or the county’s revenue for a crop is below 86 percent of a predetermined level of revenue.
Direct and countercyclical payment programs and the state-based revenue program known as ACRE were eliminated by the 2014 farm bill. A farmer now can choose one of two new farm programs starting with the 2014 crop: Price Loss Coverage or Agriculture Risk Protection.
Price Loss Coverage, or PLC, is a program that makes a payment to a producer when the market price for a covered crop is below a fixed reference price. Agriculture Risk Protection, or ARC, makes a payment when either the farm’s revenue from all crops or the county’s revenue for a crop (the farmer may choose which alternative) is below 86 percent of a predetermined or benchmark level of revenue. The maximum coverage band is 10 percentage points (76 percent to 86 percent of benchmark revenue).
These two programs are designed to supplement crop insurance by providing support in periods of multi-year price declines and helping producers cover the crop insurance policy’s deductible. Together these two farm programs are projected to spend substantially less than the programs they replaced.