Pilot Program Planting Potential Payments

FY18 OmnibusPilot Program Planting Potential PaymentsOmnibus increases payments for certain farmers

Agriculture,  | Quick Take
Mar 27, 2018  | 4 min read | Print Article

Section 752 of the $1.3 trillion 2018 Omnibus creates a pilot program that will increase government payments to agricultural producers and set the stage for even higher payments in the next Farm Bill. The provision authorizes the USDA Secretary to rejigger the payment calculation in order to provide supplemental payments to producers who are upset that their income subsidy checks are lower than some of their neighbors’ who also chose county-level Agriculture Risk Coverage for the 2017 crop year.

Under the 2014 Farm Bill, agricultural businesses growing certain commodities (crops like corn, peanuts, and wheat) were given the opportunity to enroll in one of two new income entitlement programs — the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. ARC delivers checks to individuals when the average revenue for a county falls below the average level experienced in recent years. PLC provides payments when the market price of a covered commodity is less than the government guaranteed reference price of that commodity in the farm bill. While sold to the public as cheaper alternatives to the discredited direct payments program, which cut checks from the Treasury every year no matter what, these programs are actually much more expensive than originally projected.

Despite the nearly $19 billion in cost overruns, some agricultural producers are unhappy with the amount of taxpayer dollars they receive and want even more. In calculating potential payments for a county, the USDA uses yield data as reported in the National Agricultural Statistics Survey (NASS). This is a survey sent to farming and ranching businesses asking about their actual experience, costs, harvest level, and other business information. In some counties, there are not enough responses to gain an accurate understanding of life on the ground (either because there aren’t enough producers growing that particular crop or because most farmers chose to not respond to the survey). So now there are instances of counties where the ARC payment is $0 while literally one county over payments are being made.

This pilot program allows the USDA Secretary to use an “alternative” calculation in order to boost payments. The alternative calculation will use NASS data from any neighboring county. If that doesn’t produce a sufficient increase in payments, USDA can use a whole different data set, most likely yield data reported under the federally subsidized crop insurance program (crop insurance is run by the USDA’s Risk Management Agency. ARC and PLC are managed by a separate part of USDA called the Farm Service Agency.) Any alternative calculation can only increase payments; it can never be used to decrease ARC payments.

When it comes to shoveling taxpayer cash to businesses involved in agriculture, lawmakers just can’t help themselves from undertaking shenanigans like this pilot project, the pecan payout in section 731, or the cotton carveout in the previous spending bill. That’s why farm bills always cost more than promised and we’re on a path to a Trillion Dollar Farm Bill.

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