Farm Progress

Producers need to enroll in USDA’s Agriculture Risk Coverage and Price Loss Coverage programs for 2017 crop.

July 24, 2017

3 Min Read
VIST FSA NOW: Iowa producers have already elected to participate in ARC or PLC, but to get program benefits they must enroll for 2017 crop year by signing a contract at FSA office before Aug. 1 deadline.

Bob Wegand, acting state executive director for the USDA Farm Service Agency, reminds farmers they have until Aug. 1 to enroll in Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs for the 2017 crop year. These programs trigger financial protections for participating agricultural producers when market forces cause substantial drops in crop prices or revenues.

“Producers have already elected ARC or PLC, but to receive program benefits, they must enroll for the 2017 crop year by signing a contract before the Aug. 1 deadline,” says Wegand. “Please contact your local FSA office now to schedule an appointment if you have not yet enrolled.”

Covered commodities under the programs include barley, canola, large and small chickpeas, corn, crambe, flaxseed, grain sorghum, lentils, mustard seed, oats, peanuts, dry peas, rapeseed, long grain rice, medium grain rice (includes short grain and sweet rice), safflower seed, sesame, soybeans, sunflower seed and wheat. For more program information, contact your local FSA office or visit fsa.usda.gov/arc-plc. To find your local FSA office, visit offices.usda.gov.

Coping with downturn in farm economy
Farm Credit Administration officials are also urging farmers to enroll in the USDA farm program to be eligible for the financial safety net. At its monthly meeting July 13, the FCA board received a report from the agency’s chief economist on the situation and differences between the farm crisis of the 1980s and the current economic downturn in the farm economy.

Chief economist Stephen Gabriel says many observers are asking if the current downturn is a prelude to a 1980s-style financial crisis. “The likelihood of this is very low,” he says. “A confluence of adverse factors led to the crisis that occurred in the 1980s. It would take a similar combination of adverse developments to precipitate another crisis in the farm economy.”

These two periods are indeed similar in some respects, says Gabriel. Both downturns were preceded by a “demand shock” that pushed up grain and soybean prices, and consequently, farm incomes. In each case, farmland values and farm debt rose quickly before the downturn. And in each case, grain prices and farm incomes fell sharply after the downturn. But there are also some important differences.

Unlikely to become a 1980s-style crisis
“Interest rates were very high in the 1980s, exacerbating the debt burden of many farmers. Today’s interest rates are historically low. And though short-term rates are rising, they are likely to rise slowly,” he says.

The price of oil is another major difference. In 1979 and 1980, the price surged, while today it is declining. Also, the general economy is in better shape today than it was in the 1980s. The country experienced two recessions during the 1980s crisis, whereas “today we’re in an extended, if lackluster, economic recovery,” says Gabriel.

Finally, real estate mortgage underwriting appears to have been “far more conservative during the most recent run-up in farmland prices” than it was during the 1980s, he says.

Pay attention to risk management
“Nevertheless, conditions in the ag economy could deteriorate further if grain and soybean prices remain at low levels, or if interest rates rise quicker than expected,” he says. “Economic shocks, such as disruptions in international trade, could also weaken the ag economy.”

“Fortunately, the Farm Credit System is well positioned to manage additional stress,” says Gabriel. “The system is well capitalized, and its credit quality is good. What’s more, the Farm Credit Administration, which regulates the system, now has enforcement authorities it did not have during the farm financial crisis of the 1980s.”

Source: USDA and FCA

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