June 21: Senate approved the Agriculture Reform, Food and Jobs Act by a vote of 64 – 35.
July 11: House Agriculture Committee approved the Federal Agriculture Reform and Risk Management Act by a vote of 35 – 11.
Cotton Provisions
Stacked Income Protection Plan (STAX) for Upland Cotton
- Revenue insurance product authorized in Title XI – Crop Insurance
- Provisions common to both Senate and House bills include
o Producer makes annual decision to purchase STAX
o Projected price based on futures market during pre-planting period
- Senate uses futures market only
- House uses higher of futures market or fixed reference price of $0.6861
o Expected county yield is higher of long-term trend yield or 5-year Olympic average yield
o Expected county income determined as product of projected price and expected county yield
o Actual county income determined as product of harvest-time futures market and actual county yield
o Indemnity triggered if actual county income falls below selected coverage level multiplied by expected county income
o Ability to purchase coverage over span of 90% to 70%, effectively covering 20% span
- Coverage adjustable in 5% increments
o Premium subsidy set at 80%
o Available in all counties with cotton production
o Ability to customize policy by selecting protection factor over range of 0.8-1.2
- Does not alter frequency of indemnity but adjusts level of indemnity by ±20%
o Ability to add harvest price protection
- Allows coverage to adjust upward if futures market rises by harvest
o Can purchase on 100% of upland cotton area
o Buy-up coverage not required in order to purchase STAX
o Products differentiated by irrigated and non-irrigated practices where data available
- STAX differences include
o Senate uses futures market to determine projected price; House establishes projected price based on higher of futures market or reference price of $0.6861
o Senate specifies STAX in '13 if practicable; House mandates STAX in '13
Marketing Loan for Upland Cotton
- Provisions common to both Senate and House bills include
o Loan rate set equal to the 2-year moving average of the Adjusted World Price (AWP) for the two most recently completed marketing years
o Announced Oct. 1 preceding plantings
o Determination of prevailing world market price and premiums/discounts unchanged from '08 bill
o Rules for import quotas unchanged from '08 bill
- Differences in storage credits
o Senate bill provides at '06 crop rates reducedby 20%
o House bill provides at '06 crop rates reduced by 10%
Economic Adjustment Assistance Program
- Maintained at $0.03 per pound
Extra Long Staple Cotton Provisions
- Loan rate maintained at $0.7977 per pound
- Competitiveness provisions unchanged from '08 bill
General Insurance Provisions
Supplemental Coverage Option (SCO)
- New insurance product available for purchase that will insure a portion of the value of the deductible in an underlying insurance product that will generally be available for all program crops with sufficient county-level data
- Provisions common to both Senate and House bills include
o For acres not enrolled in a Title I revenue program (i.e. Senate's Agricultural Risk Coverage and House's Revenue Loss Coverage), SCO indemnities are triggered when the county experiences a 10% loss
o Loss triggers can be based on county revenue or county yield; triggers willdepend on underlying insurance policy
o Upland cotton producers may purchase either STAX or SCO, but may not purchase both products on the same acre
o Premium subsidy of 70%
o Begin to provide coverage not later than the '13 crop
- SCO differences include
o In the Senate bill, acres enrolled in the Title I revenue program ARC face a 21% loss trigger in SCO
o In the House bill, acres enrolled in the Title I revenue program RLC are ineligible to purchase SCO
Other Insurance Provisions
- Provisions common to both Senate and House bills include
o Enterprise unit pricing made permanent, i.e. 80% subsidy on coverage up to 70%
o Beginning with '13 crop, make available separate enterprise units for irrigated and non-irrigated acreages
o To determine county yields, expand data sources to include RMA, NASS or other data as determined by Secretary
o Increases the T-yield from 60% to 70% of county average
o Future SRA changes are budget neutral
- Differences include
o Beginning with '14 crop, House bill authorizes purchase of different coverage levels on irrigated and non-irrigated acres
o Senate bill imposes AGI means test on premium subsidies – If AGI > $750k, then premium subsidy reduced by 15 percentage points
o Senate bill requires conservation compliance on insured acres
Selected Title I Provisions
Repeal of DCP & ACRE Programs
- Senate and House bills repeal Direct Payments, Counter-cyclical Payments and ACRE Program for all commodities
Price/Revenue Provisions for "Covered" Commodities
- Senate and House bills take different approaches to the price/revenue provisions available for "covered" commodities, excluding upland cotton
- Key features of the Senate's Agriculture Risk Coverage (ARC) include
o One-time irrevocable election to receive individual coverage or county coverage under ARC
o Benchmark revenue generally determined as product of 5-yr Olympic average price and the 5-yr Olympic average yield, either county or individual depending on election
- Special rules for rice and peanuts that allow substitution of fixed prices ($13.00/cwt and $530/ton, respectively) in 5-yr Olympic average price
o Actual revenue is the actual yield (either county or individual depending on selection) multiplied by the higher of the midseason price and the loan rate
o Payments made if actual revenue falls below 89% of benchmark revenue, but payment cannot exceed 10% of benchmark, effectively covering 89%-79% span
o For county program, paid on 80% of planted acres & 45% of prevented planting; for individual program, paid on 65% of planted & 45% of prevented planting; planted acres not to exceed base
- Key Features of House's Price Loss Coverage (PLC) and Revenue Loss Coverage (RLC)
o One-time irrevocable election on a crop-by-crop, farm-by-farm basis to participate in either PLC or RLC
o PLC reference prices for selected commodities: wheat - $5.50; corn - $3.70; sorghum - $3.95; rice - 14.00; soybeans - $8.40; peanuts - $535
o PLC payment rate is difference between the reference price and the higher of the mid-season average price and the loan rate
o Under PLC, one-time opportunity in 2013 to update payment yield to 90% of '08-12 Olympic average yield per planted acre; for '08-12 years, producer can use 75% of county yield as plug; CCP yield used
if producer opts not to update
o Payment acres under PLC equals sum of 85% of planted acres and 30% of acres prevented planting with payment acres not to exceed base
o Under RLC, benchmark revenue generally determined as the product of the 5-yr Olympic average price and the 5-yr Olympic average county yield
- In any year of the 5-year period, the reference price may be substituted for the marketing year average price
- In any year of the 5-year period, 70% of the transitional yield may be substituted for the actual county yield
o Actual county revenue is the actual county yield multiplied by the higher of the midseason price and the loan rate
o RLC payments made when actual county revenue falls below 85% of the benchmark revenue, but payment cannot exceed 10% of benchmark, effectively covering 85%-75% span
o Payment acres under RLC equals sum of 85% of planted acres and 30% of acres prevented planting with payment acres not to exceed base
o To the extent practicable, RLC programs differentiated by irrigated and non-irrigated practice where data are available
Marketing Assistance Loans
- Senate and House bills specific marketing loan rates for selected commodities at the following levels: wheat -$2.94; corn - $1.95; sorghum - $1.95; rice - 6.50; soybeans - $5.00; peanuts - $355 (Rates for upland cotton and ELS cotton detailed in previous section)
Payment Limits and Eligibility Tests
- The Senate and House bills both incorporate changes to limits and means tests associated with Title I program benefits. Note that the restrictions detailed in this section do not apply to STAX or other insurance products
- Adjusted Gross Income (AGI) means test
o Senate at $750k means test for ARC, MLG/LDPs
o House at $950k means test for PLC, RLC, MLG/LDPs
- Limits on Price/Revenue Programs
o Senate at $50k/person/entity on ARC payments; separate limit for peanuts
o House at $125k/person/entity on PLC/RLC payments; separate limit for peanuts
- Limits on Marketing Loan Gains/Loan Deficiency Payments
o Senate at $75k/person/entity; separate limit for peanuts
o House has no limit on MLG/LDPs (consistent with current law)
- Definition of Actively Engaged
o Senate requires contribution of management "and" labor
o House maintains current language requiring management "or" labor
Selected Provisions from Other Titles
- Conservation Reserve Program
o Incremental reduction to 25 million acres by FY17
- Conservation Stewardship Program (CSP)
o Maintains payment limitation of $200,000 per person or legal entity
o Allows a one-time contract renewal if the producer agrees to an increase in conserving practices
o Expiring CRP acres receive priority if they want to enroll in CSP
o House allows enrollment of 9,000,000 acres per fiscal year and the Senate allows enrollment of 10,348,000 acres per fiscal year
- Environmental Quality Incentives Program (EQIP)
o Consolidates Wildlife Habitat Incentives Program (WHIP) into the EQIP program
o Keeps the current 60% of funds carve out for livestock and adds a 5% of funds carve out for wildlife habitat
o Funding in the House is $1.75 billion for 2013-2017. Senate funding ranges from $1.5 in 2013 to $1.65 billion starting in 2015
- Agricultural Conservation Easement Program
o Combines the Wetlands Reserve Program, Grasslands Reserve Program and the Farmland Protection Program in one wetland and agricultural easement program
o Maintains appraisal valuation
o Funding in both bills is no less than 40% for FY 2013-2016 and in the House no less than 50% for FY 2017 for agricultural land easements and the balance to wetlands.
o Allows priority for lands coming out of CRP to enter the easement program
Trade Programs
- Market Access Program (MAP) and Foreign Market Development (FMD) Programs funded annually at current levels of $200 million and $34.5 million, respectively