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1 [1] (April 3, 2019)

handle is hein.crs/govzan0001 and id is 1 raw text is: ii.frrmirgthel~i tvdboSin 11 April 3, 2019 2018 Farm Bill Primer: ARC and PLC Support Programs Background The Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs provide income support to covered commodities at levels above the price protection offered by the marketing assistance loan (MAL) program's loan rates. Participation is free for both ARC and PLC. However, a producer must sign up and elect ARC or PLC for the farm's historical base acres (described below). Program Origins ARC and PLC were first authorized under the 2014 farm bill (P.L. 113-79). The 2018 farm bill (Agricultural Improvement Act of 2018, P.L. 115-334) extended both programs with several modifications intended to increase producer flexibility in their use. See CRS Report R45525, The 2018 Farm Bill (P.L. 115-334): Summary and Side-by- Side Comparison. Producer Election Producers choose between PLC and ARC based on their preference for protection against a decline in either (a) crop prices (Figure 1) or (b) crop revenue (Figure 2), respectively. Furthermore, producers can elect ARC at either the county (ARC-CO) or individual farm (ARC-IC) level. PLC and ARC-CO choices can vary across covered crops (for a list of covered crops, see Figure 3), whereas ARC-IC includes all covered crops on a farm under a single farm-level revenue guarantee. Price Loss Coverage (PLC) PLC price protection is based on a statutorily fixed reference price. The 2018 farm bill added an escalator provision that could potentially raise a covered commodity's effective reference price (used to determine the PLC per-unit payment rate) to as much as 115% of the statutory PLC reference price based on 85% of the five-year Olympic average (OA) of the national market-year average farm price (MYAP). PLC makes a payment when the MYAP is less than the effective reference price (Figure 1). The PLC payment rate equals the difference between the effective PLC reference price and the higher of the MYAP or the MAL loan rate. The PLC payment rate times the program yield determines the per-acre payment rate. The PLC payment rate times 85% of base acres signed up for the respective covered commodity equals the total payment. County-Level ARC (ARC-CO) The ARC-CO crop revenue guarantee equals 86% of the benchmark revenue (Figure 2). The benchmark revenue is the product of the five-year OA of county yields and the five-year OA of national MYAPs. In calculating the five- year OA of national MYAPs, the effective PLC reference price is substituted for the MYAP in those years where it is larger. A payment is made if the product of current-year county yield and MYAP is below the ARC-CO revenue guarantee. Figure I. PLC Payment Formula Effective Referel PLC effective reference price (equalsh ghcr oft tho PLC refercfnco price set in statute; or 85% af the Olympic 5-year AVIG MYAP) Rut capped at 15 PLC referenoupr~Ec, nc, Price Farm Price Natinnal Markpt-Year AVG Farmi Price MYAP4) MAL loan rate I$/uriit) FaPLLC Pyens PLC~~~~ Jac.)Rt~($w~t Source: CRS. Notes: MAL = marketing assistance loan program. The Olympic average is calculated by removing the high and low years, then averaging across the remaining years. Program yields are historical farm-level yields used to determine per-acre payment rates. Figure 2. County-Level ARC-CO Payment Formula Source: CRS. Note: The ARC-CO per-acre payment rate is capped at 10% of the ARC-CO county benchmark revenue per acre. Under the 2018 farm bill, yield data from the U.S. Department of Agriculture's (USDA) Risk Management Agency (RMA) is the primary source for county average yields for calculating the ARC-CO benchmark revenue. Where RMA data is not available, USDA is to determine the data source considering data from USDA's National Agricultural Statistical Service or the yield history of representative farms in the state, region, or crop-reporting district. Also, ARC-CO is to use a trend-adjusted yield to https://crsreportscongressgov County F Revernue -4% Guarantee Cu~yA(C Olynn Pic ~Actual R oIrGL ne 5yaAv.County R ns n~ Nationa A 6% Revenue u~ eeu Natioal MYP B ~hm k Higher of fNaticnai MYAP orr O~~yi~~pk ~MAL ioja ri ratocAC) OP mns Actual m s base acres county yield t/m s S50/ ($/acre) ($/acre) ($/acre) County Yield