USDA rolls out details of new farm payment programs based more on farmer risk

Markets Associated Press

Farmers can start as early as next week on signing up for new safety net programs that U.S. Agriculture Secretary Tom Vilsack said replaces the much-criticized direct payments with government payouts based on the risks farmers face.

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Vilsack traveled to St. Paul, Minnesota, to hold a news conference to announce the rollout of the programs on Thursday. He held a conference call with reporters to further discuss the programs and answer questions. The programs were established in the 2014 farm bill and will allow farmers to protect themselves against commodity price drops and from lower revenue in poor crop years.

Payouts this year could be significant since anticipated record corn and soybean harvests have sent prices plummeting. At current prices many farmers are likely to lose money, a scenario that will enable them to collect government payments.

The new programs cover this year's harvested crop. Farmers will receive payment in October 2015. The programs are in addition to crop insurance farmers may buy to cover losses from flooding, drought, hail and other natural disasters.

Vilsack said without the programs, the risk of farming could be so great that many farmers would quit.

"We want to encourage people to stay in the business of farming," Vilsack said. "I think, frankly, this system is much more risk-based and much more of a partnership between the government and producers than the direct payment program was, where basically the government was paying regardless of whether prices were good or not."

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Vilsack said farmers can sign up as soon as Sept. 29 but he expects they will take several months to research their options, talk with advisers and use online calculators to determine their best choices. He said no firm deadline has been set but farmers will likely be given until early next year to make enrollment decisions.

Farm owners must first make some decisions about establishing the number of acres and yield history they'll submit to the USDA to be used to compute coverage through 2018. Next, producers of major row crops — mostly corn, soybeans, wheat and rice — must decide between a price loss coverage program that pays when commodity prices drop below specified levels and an agriculture risk coverage program that pays when their revenue falls below certain levels.

The farm bill, signed into law in February, provided $6 million for setting up local meetings, designing online tools and creating educational materials to help farmers choose which safety net program would be best.

Wayne Humphries, who grows corn and soybeans and raises hogs on about 1,000 acres in southeast Iowa, said the new programs are complex and will take some work to understand.

"I think the farm programs are going to be adequate," he said. "We have for years tried to move toward a more market-oriented program and it has arrived, so we'll understand and embrace whatever suits our particular farms and we'll go from there."