Economic impacts of the safety net provisions in the Agriculture Risk Coverage Improvement and Innovation Act (S. 2749) on AFPC's representative crop farms.
Abstract
This report analyzes the economic impacts of the safety net provisions in the Agriculture Risk Coverage Improvement and Innovation (ARC-II) Act (S. 2749) as introduced by Senators Brown and Thune on 25 April 2018 on the Agricultural and Food Policy Center's (AFPC) 63 representative crop farms. The analysis compares the projected outcomes for the representative farms under three options: (1) the current program baseline (the Agricultural Act of 2014 (2014 Farm Bill) provisions and current agriculture risk coverage (ARC)/price loss coverage (PLC) commodity elections), (2) the 2014 Farm Bill provisions assuming producers can change their elections between ARC and PLC in 2019, and (3) the commodity program provisions contained in the ARC-II Act. In general, ARC-II changed the parameters of the ARC program that were expected to strengthen it as a safety net going forward, as well as weakened the PLC program as a safety net by setting reference prices to the lower of the current statutory rates or the 10-year moving average of the most recent marketing year average prices. Given the FAPRI 2018 Baseline commodity price forecast, the representative farm results indicate that the changes proposed in the ARC-II Act provide only marginally improved safety net protection for feed grain producers relative to simply allowing producers to go through the election process again. The results for wheat, cotton, and rice farms were much more pronounced in favoring the re-election process.