2013 farm bill

Extension and Outreach/Department of Economics

2013 Farm Bill

ISU Extension Farm Management In-serviceNashua, IowaMay 20, 2013

Chad HartAssociate Professor/Crop Markets Specialist

[email protected]


Farm Bill Progress?House and Senate have basically revived their

packages from last year

A couple of new wrinkles have been added to address specific crop concerns

Like last year, the key will be the floor vote in the House (which didn’t happen last year)


Ideas on the Next Farm BillLet’s look at the common features

Both versions of the farm bill eliminate direct payments, countercyclical payments, ACRE, and SURE

The marketing loan program would continue

Livestock disaster programs would be reestablished


Reference PricesSenate: 55% of 5-yr Olympic average MYA

price

House: Set by lawCorn $3.70Wheat $5.50Soybean $8.40

Corn $2.95

Wheat $3.62

Soybean $6.29


ARC or RLC instead of ACRERevenue-based support program

Revenues based on 5-year Olympic averages for yields and prices

Yields and prices have cups (T-yields and reference prices)


Revenue ProgramsSenate House

ARC-County ARC-Farm RLC

Payment acres

Planted and prevented

(up to Base)

Planted and prevented

(up to Base)

85% of Planted (up to Base)

Benchmark revenue

5-yr OA county yield * 5-yr OA MYA price

5-yr OA farm yield * 5-yr OA MYA price

5-yr OA county yield * 5-yr OA MYA price

Actual revenue

County yield * Max(MYA price or loan rate)

Farm yield * Max(MYA price or loan rate)

County yield * Max(midseason price or loan rate)

Revenue guarantee

88% of benchmark 88% of benchmark 85% of benchmark


Revenue ProgramsSenate House

ARC-County ARC-Farm RLC

Payment rate

Min(Guarantee – Actual revenue, 10% of benchmark)



Payment made on

80% of planted acres and 45% of prevented acres

65% of planted acres and 45% of prevented acres

Payment acres


AMP or PLC instead of CCPPrice-based support program

Reference prices establish targets

Works like CCP

Payment rate = Max(0, Reference price – Max(MYA price, Loan rate))


Price ProgramsSenate House

AMP RLC

Payment acres

85% of Base acres 85% of Planted

(up to Base)

Payment yield

CCP yields CCP yields w/ updating


Dairy Dairy Producer Margin Protection Program

Voluntary margin coverage, with the opportunity for supplemental coverage

Dairy Market Stabilization Program Managed supplies when margins fall

Packages are very similar across the House and Senate versions


Supplemental Coverage Option (SCO)An additional policy to cover “shallow losses”

Shallow loss = part of the deductible on the producer’s underlying crop insurance policy

SCO is county-level yield or revenue policy

Indemnities are paid when the county experiences losses greater than 10% of the expected yield or revenue level, but payments are not more than the original deductible


SCO Examples from Last Year’s Bills

Source: Congressional Research Service


Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/~chart/

Iowa Farm Outlook:http://www.econ.iastate.edu/ifo/

Ag Decision Maker:http://www.extension.iastate.edu/agdm/

2013 farm bill

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