Arkansas Farmers Get Farm Bill Payments As Rural Economic Downturn Deepens

With commodity prices for many crops and agriculture products underwater, farmers across Arkansas and the U.S. who signed up for the new farm bill assistance program will soon receive payments in the mail.

According to the U.S. Department of Agriculture, nearly one half of the 1.7 million farms that signed up for either the Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) programs will receive more than $4 billion in safety-net payments for the 2014 crop year. The programs primarily allow producers to continue to produce for the market by making payments on a percentage of historical base production, limiting the impact on production decisions.

Crops receiving assistance include barley, corn, grain sorghum, lentils, oats, peanuts, dry peas, soybeans, and wheat. In the upcoming months, disbursements will be made for other crops after marketing year average prices are published by USDA’s National Agricultural Statistics Service.

RICE FARM PAYMENTS BEGIN IN NOVEMBER
Any disbursements to participants in ARC-County or PLC for long and medium grain rice will occur in November, for remaining oilseeds and also chickpeas in December, and temperate Japonica rice in early February 2016. ARC-individual payments will begin in November. Upland cotton is no longer a covered commodity.

Nationwide, 96% of soybean farms, 91% of corn farms, and 66% of wheat farms elected the ARC-County coverage option. Ninety-nine percent of long grain rice and peanut farms, and 94% of medium grain rice farms elected the price-loss coverage option. Overall, 76% of participating farm acres are protected by ARC-County, 23% by PLC, and one percent by ARC-Individual.

“Unlike the old direct payments program, which paid farmers in good years and bad, the 2014 Farm Bill authorized a new safety-net that protects producers only when market forces or adverse weather cause unexpected drops in crop prices or revenues,” said Agriculture Secretary Tom Vilsack. “The nearly $4 billion provided today by the ARC and PLC safety-net programs will give assistance to producers where revenues dropped below normal.”

REGIONAL FARMING DOWNTURN DEEPENS
As Arkansas and regional farmers receive the needed payments, the Federal Reserve of St. Louis recently reported much larger percentage of bankers across the expansive Eight District are saying farm income declined in the second quarter of 2015, compared with the same period a year earlier.

“Payments associated with the 2014 Farm Bill will probably be too little and too late to head off severe financial damage to most grain operations. Lenders, suppliers, and equipment dealers will also be adversely affected.” said one Arkansas banker who responded to the Fed’s second quarter Agriculture Monitor.

According to the Fed’s St. Louis district, which includes Arkansas and all or parts of seven Midwest and Mid-South states, this is the fourth straight quarter that the region’s farming economy fallen deeper into negative territory.

“In fact, bankers’ assessments were so overwhelmingly negative that the index value reached its lowest level in the short history of this survey,” said the St. Fed’s quarterly agri survey. “A similar share of respondents expects that farm income will continue to decline in the third quarter. Consistent with the steady deterioration of farm income, bankers also reported declines in both household expenditures and capital spending by farmers and ranchers.”

At the same time, the Creighton University Rural Mainstreet Index that surveys the rural economy across the Midwest shows that farming communities across region are struggling to stay afloat. The Rural Mainstreet Index (RMI), which ranges between 0 and 100, sank to 44.4 in October from September’s 49.0 and well below August’s growth neutral 50.0.

“This is the third straight month that the overall index has declined, reflecting weakness stemming from lower agriculture and energy commodity prices and from downturns in manufacturing exports,” said Creighton University economist Ernie Goss.

Besides falling crop prices, the farmland and ranchland price index for October declined for the 23rd straight month to 31 from 35.5 in September. Also, the October farm equipment-sales index slumped to a record low 10.8 from September’s anemic 14.2.

“The 2014 and 2015 downturns in farm income continue to reduce sales and production of agriculture equipment dealers and producers across the region,” said Goss.

The sequestration or Budget Control Act of 2011 passed by Congress requires USDA to reduce payments by 6.8%. According to a Congressional Research Service (CRS) report, sequestration levels for farm programs in the previous two fiscal years were 7.2% and 7.3%

For data about other crops, as well as state-by-state program election results, final PLC price and payment data, and other program information including frequently asked questions, link to this USDA website page.

Producers are encouraged to visit their local Farm Service Agency office.