1. Farm Service Agency 2014 Farm Bill Programs
Presentation to the Agriculture and Natural Resource Program Leaders Joint Meeting
Joy Harwood, Robert Stephenson, Connie Holman, and John Tamashiro
Farm Service Agency
June 3, 2015

2. Where We Fit In at USDA USDA
The Farm Service Agency (FSA) is one of many agencies within the U.S. Department of Agriculture.
FSA falls under the leadership of the Under Secretary for Farm and Foreign Agricultural Services.
Office of the Under Secretary for Farm and Foreign Agricultural Services
Farm Service Agency
Risk Management Agency
Foreign Agriculture Service

3. FSA Background and Brief History
Established as the Farm Security Administration during the depression of the 1930s.
Context: severe economic hardship as farmers faced very low prices, drought, foreclosure of farms, heavy debt, and other problems.
FSA’s earliest role was geared around provision of credit.
About same time, the Soil Conservation Service was started to help farmers control erosion and protect natural resources.
Over time, the agency was renamed and its role has evolved.

4. Program Delivery Occurs at the Local Level
Agricultural producers can apply for benefits and service at one of over 2,100 local USDA Service Centers and through the FSA website.
More than 7,600 farmers are locally elected to be county committee members.
These County committees resolve local issues and are accountable to the Secretary of Agriculture.

5. Main Categories of Programs
All of our programs are voluntary:
The main safety net programs help producers manage market price and income risks.
Disaster assistance programs to help manage weather risks.
Farm loan programs assist disadvantaged and beginning farmers who do not have access to commercial credit.
Environmental protection programs to reduce erosion, improve water quality and increase wildlife habitat.
Note: Supply management, a traditional element of the commodity program, was eliminated in Thus, farmers are no longer required to idle land as a condition for receiving price or income supports.

6. Who are FSA’s customers?
Corn farmers in Iowa
Tomato growers in Florida
Dairy farmers in Wisconsin
Vineyards on Long island
Cattlemen in Oklahoma
Orchardists in California
Catfish growers in Arkansas
Tree farmers in Maine
Miscanthus producers in Missouri
Honey farmers in Texas

7. 2014 Farm Act Changes to Commodity Programs
Price support programs
Sugar
Dairy
Crop insurance and disaster assistance programs
Crop Insurance
Supplemental Revenue Assistance
Livestock Disaster Assistance
Farm programs
Marketing loans
Direct payments
Counter-cyclical payments
Average Crop Revenue Election (ACRE)
Milk Income Loss Contracts (MILC)
Sugar program continues unchanged
Dairy Product Price Support (and Dairy Export Incentive Program) repealed immediately; MILC repealed by Sept 1, 2014, or as soon as new Dairy Margin Insurance Program operational
Marketing assistance loan program continues unchanged, except that the loan rate for upland cotton, unlike the fixed rates set for other commodities, will be based on a 2-year moving average within a range ($0.45-$0.52). The maximum rate is the same as the fixed rate under previous legislation.
Crop insurance continues, with provisions for expansion (rice margin insurance, peanut revenue insurance, new products for livestock, bioenergy, and specialty crops)
SURE (whole-farm crop disaster assistance) ended with crop year 2011 and is not reinstated
Disaster assistance for livestock reinstated retroactively (including forage loss and death losses—from natural and disease disasters--for traditional livestock, as well as bees and farm-raised fish)
Also for orchard and nursery trees, vines, and bushes

8. New 2014 Programs Commodity programs: Price Loss Coverage (PLC)
Agriculture Risk Coverage (ARC)
Margin Protection Program for dairy producers
Crop insurance programs:
Stacked Income Protection Plan (STAX) for upland cotton producers
Supplemental Coverage Option (SCO)

9. Primary Safety Net Programs for Major Field Crops: ARC and PLC
Price Loss Coverage (PLC)—Triggers when market prices fall below a reference price set in the farm bill.
Agriculture Risk Coverage (ARC) Program—
Triggers when county crop revenue drops below 86 percent of the county benchmark revenue.
Producers may choose to participate in ARC using individual farm revenue instead of county revenue.

10. Producers Have Many Choices… Title XI: Crop Insurance Programs
For each covered commodity OR For each farm
One time decision for the life of the Farm Bill
PLC
County ARC
Individual ARC
Title XI: Crop Insurance Programs
For each covered commodity and upland cotton
Annual decision
Crop yield
insurance
Crop revenue
insurance
No Crop
insurance
1) Producers who wish to participate in Title I commodity programs must choose, for base acres of each covered commodity, whether to enroll in PLC or ARC
Or they may choose to enroll one or more of their farms in individual ARC, which automatically places all covered commodities on the farm under that program
(farm operations may include more than one FSA-defined farm, usually when a producer operates both owned and rented acreage—generally, each individually owned acreage will be a separate FSA farm)
[also will be faced with choice of whether to update base acres to plantings for PLC or ARC, and whether to update payment yields to averages for PLC]
2) Producers may also choose each year whether to purchase traditional crop insurance policies (yield or revenue). If the producer’s covered commodities are enrolled in PLC the producer may also choose to purchase an SCO policy (commodities enrolled in county or individual ARC are not eligible for SCO)
Producers of upland cotton instead will be faced with the choice of whether to purchase STAX policies and whether to combine those policies with traditional crop insurance
For PLC/ARC, choices will likely rest on expected prices (for fixed reference vs. moving average) and how closely individual farm yield match county yields (for county vs. individual yield)
SCO choice will be linked to PLC/ARC choice, since ARC choice precludes SCO. Again, price expectations (moving average vs. within-year benchmarks) and relationship of farm to county yields (PLC payment yields are individual farm average; individual ARC are annual farm average; county ARC is county average). Yield vs. revenue coverage also linked to price expectations—if PLC expected to provide price protection, yield coverage is less expensive.
Crop insurance choice will link to SCO decisions about coverage levels of county-based SCO policies and individual farm insurance policies—how much yield or revenue to cover with SCO (which may have higher premium subsidy, depending on choice of farm unit coverage)
Choices may also link to:
payments under PLC/county ARC being made on base acres rather than planted acres
county ARC versus individual ARC payments made on 85 vs 65 percent of base
SCO coverage is on planted acres (although based on county yields)
Annual decision
If not in ARC or STAX
only cotton
if not in ARC or STAX
only cotton
only cotton
SCO yield
STAX
SCO
revenue
STAX
STAX

11. Yield Data is Very Valuable
ARC-County requires yields for 21,000 counties (for 22 commodities):
By county, crop, and practice (irrigated vs. non-irrigated)
We rely on NASS county yields and crop insurance yields where those data are available (about 9,400 counties).
Where NASS and crop insurance yields are unavailable, yields for the remaining 11,600 counties are estimated by FSA state offices—and extension help is EXTREMELY VALUABLE.

12. 2014 Farm Bill Disaster Programs
These programs are funded by the CCC
Livestock Forage Program
Tree Assistance Program
They do not end with the 2014 Farm Bill
Livestock Indemnity Program
Livestock, Honey Bees, Aquaculture Program
2008 Farm Bill disaster programs did not cover losses after September 30, These 2014 programs are very similar, and payments have been made to cover losses since late 2011.
“LFP”--Assistance to ranchers who suffer grazing losses due to drought.
“TAP”--Assistance to orchardists whose vines or trees are lost due to a natural disaster.
“LIP”--Assistance to ranchers who suffer livestock death losses in a natural disaster.
“ELAP”--Funds for losses that are not covered by any other program.

13. Non-Insured Crop Disaster Assistance Program (NAP)
NAP provides yield coverage to producers where crop insurance is not available.
It was first made available in 1994 legislation, but only at the “catastrophic” level through 2013.
The 2014 Farm Bill now allows producers to “buy up” to 65-percent yield coverage for a premium payment.

14. Yield and Price Data are Critical for Implementing Disaster Programs
For the livestock programs:
Value by species (including bison, elk, honey bees, aquaculture, etc.)
Stocking rates, etc.
For TAP and NAP:
Price and yield data by type of crop.

15. New Dairy Margin Program
Margin Protection Program (MPP) for dairy
Protection is based on the “margin” between the milk price and feed costs.
“Basic” coverage protects the producer at the $4 margin level.
Producers can “buy up” for additional margin protection above the base coverage level.
Payments are based on historical output.
Risk management options—broadly defined—include margin insurance program and livestock disaster programs
MPP
Payment made when ‘production margin’ falls below coverage level over a two consecutive month period
Producer can select coverage levels from $4.00 to $8.00 per cwt in $0.50 increments,
Producer has no premium for minimum $4.00 per cwt coverage but increase with additional coverage to $8.00 per cwt
Premiums (at all coverage levels) higher for production above 4 million pounds
No ‘supply control’ feature, except payments made on historical production and lower subsidies provided for purchasing insurance on production above legislated level
Annual decision to purchase coverage
Payment based on base production, not actual production (determined at time of first enrollment)
Livestock disaster assistance
LFP—provides payments to reimburse producers for a share of feed costs when forage lost due to natural disaster
LIP—provides payments to livestock owners for loss of livestock due to adverse weather or attacks by reintroduced wildlife—pays a share of fair market value
ELAP—provides payments to producers of livestock, honeybees, and farm-raised fish for losses from adverse weather, disease, and other conditions not covered by LFP/LIP
[Tree Assistance Program also offered for orchard and nursery trees, bushes, and vines—payments for replanting or rehabilitating from damage caused by natural disasters
Programs are no longer required to purchase crop insurance or NAP coverage to be eligible for payments (as was the case under 2008 Farm Act)
Programs are retroactive to cover losses since Sept 30, 2011

16. Sec. 1614: Farm Decision Tool and Education Funding
Farm Decision Tools:
$3 million competitive process;
ARC/PLC tools developed by Texas A&M and University of Illinois consortia;
Illinois also developed MPP and NAP tools.
Producer Education:
$3 million to educate producers on ARC/PLC, NAP buy-up, and MPP;
68 agreements and over 1,300 meetings to date.

17. Farm Loan Program Pilot Projects
Section 5302 of the 2014 Farm Bill authorizes farmer loan pilot projects of limited scope and duration to evaluate processes and techniques that may improve the efficiency and effectiveness of the Farm Loan Programs loans.
On October 8, 2014, the Notice and request for comment was published in the Federal Register.
- 31 suggestions submitted
- 7 considered and 11 not considered
- 13 administratively possible outside of the pilots
- 2 selected

18. Farm Loan Program Pilot Projects
Pilot Project #1- Credit Technical Assistance to Underserved Applicants
- Target: Underserved applicants in designated Strikeforce counties.
- FSA will work with a selected vendor to provide credit technical assistance to underserved FSA applicants in designated Strikeforce counties in selected regions of the country.
- Program: 1) Develop a farm business plan. 2) Provide credit counseling. 3) Provide technical assistance in production and marketing. 4) Incorporate the components required for FSA’s financial borrower training.
- Expected results: 1) Through training, provide skills and financial understanding to previously unreached applicants to be better prepared for credit, FSA or otherwise. 2) A waiver of FSA’s financial borrower training if applicant applies for an FSA loan.
Pilot Project #2- Pre-Eligibility Certification for Farm Ownership
- Target: Veterans, underserved, and beginning farmers.
- FSA will work with a selected vendor to develop and implement an FSA pre-approved eligibility program, whereby applicants obtain a certification of completion.
- Program: 1) Develop production related coursework and training for targeted operations. 2) Develop a farm business plan. 3) Review applicant’s credit report.
- Expected results: Upon certification, FSA will consider the applicant to have met all required Borrower Training and Eligibility requirements needed in order to receive a Farm Ownership loan up to the maximum loan limits.

19. FSA Also Administers the Conservation Reserve Program (CRP)
The Farm Bill gradually reduces the CRP acreage cap from 32 million acres to 24 million acres by 2017.
Since 2007, CRP acreage has declined by 30 percent, while CRP spending has declined by 10 percent
CRP has been shifting enrollment from whole-field to filter strips, grass waterways and other partial-field practices that take less land.
These practices are more expensive than enrolling whole-fields and are believed to produce larger environmental benefits per dollar of government spending.

20. CRP Monitoring and Evaluation Projects
Focuses on identification and quantification of CRP environmental benefits, including:
Improved water quality
Enhanced wildlife populations and habitat
Pollinator health
Reduced downstream flood damage
Biodiversity
Small budget (about $1 million annually); funding opportunities exist.

21. FSA Payments Are $10+ Billion Annually

22. Farm Programs Are Expected to Account for 11% of USDA’s FY 2015 Outlays
Total = $145 billion
“Farm and Commodity Programs” include ARC/PLC payments, marketing loan benefits, dairy MPP payments, and disaster assistance payments..

23. Getting in touch online
fsa.usda.gov
Click “Ask FSA” Or
DACO duties also include: Administering the U.S. Warehouse Act and performing warehouse examinations and audits in support of USWA and CCC programs.
Providing expertise in the development and delivery of safe and nutritious food assistance products.
Ensuring timely and economic provision of high-quality, safe food products to domestic and international humanitarian food assistance programs.
Purchasing and delivering processed commodities under domestic distribution programs such as the National School Lunch Program, Commodity Supplemental Food Program, Food Distribution on Indian Reservation Program, and the Disaster Assistance Program.
Acquiring and disposing of commodities pledged as collateral for marketing assistance loans such as wheat, corn, soybeans, oilseeds, cotton, peanuts and other commodities.
Establishing posted county prices for locations throughout the U.S. to develop loan rates, loan deficiency payments and marketing assistance.
Purchasing and delivering commodities to foreign countries under Titles II and III of Public Law 480, Food for Progress and Section 416(b) of the Agricultural Act of 1949 and the McGovern-Dole Food for Education Act, through private voluntary organizations and world government transfers
Purchasing from vendors or processors Milk Price Support program commodities such as butter, cheese and nonfat dry milk from vendors or processors
Acquiring and disposing of commodities pledged as collateral for marketing assistance loans such as wheat, corn, soybeans, oilseeds, cotton, peanuts and other commodities
Establishing posted county prices for locations throughout the U.S. to develop loan rates, loan deficiency payments and marketing assistance loan payments
Marketing, managing and regularly analyzing the location, condition, and quantity of CCC inventories such as cotton, grain, oilseeds, peanuts, nonfat dry milk and rice
Administering the CCC Storage Agreements for grain, rice, cotton, processed commodities, sugar and peanuts
Preparing claims and adjudicating debts by and against CCC resulting from export and domestic transportation and warehouse losses