Popular ARC-CO program could be modified under next farm bill

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Producers should expect to see changes to a popular federal commodity payment program under the next farm bill.

During a Wednesday meeting of the South Dakota Soybean Association in Sioux Falls, adviser to U.S. Sen. John Thune and farm bill veteran Lynn Tjeerdsma said the Agriculture Loss Coverage-County (ARC-CO) program isn't going to cut it for growers in the future without some adjustments.

"ARC isn't working, just because of the nature of the formula," Tjeerdsma said. "That needs to be changed."

The Platte-area native and former farmer is working on his sixth farm bill. He said the ARC-CO program provided a solid financial boost to growers, but it needs to be made more functional.

Before an audience of about 35 people, Tjeerdsma said a majority of growers would shift to Price Loss Coverage (PLC) if the current farm bill were simply extended and not altered. PLC issues payments when "the effective price of a covered commodity is less than the respective reference price for that commodity," according to the Farm Service Agency (FSA).

The ARC-CO program instead set a benchmark based on a five-year Olympic average of yields and national prices. Payments are then issued, according to the FSA, when the county crop revenue of a commodity falls below the benchmark.

But after a stretch of sliding commodity prices, Tjeerdsma said a 10-year Olympic average to determine benchmarks could be considered.

Tjeerdsma also anticipates the next farm bill will be passed on time, citing the poor farm economy as one major reason it needs to be pushed through.

"Historically when we've had farm bills expire, seems like we've extended one more year to get it done," Tjeerdsma said. "However, with this year's farm bill, I personally expect it to be done in 2018."

Once farm bill talks heat up, Tjeerdsma said he expects it will be focused on bringing common sense back to agricultural programs.

"Bottom line, what we're trying to do with this farm bill is put an element of common sense back into a lot of these programs so that they can be used, they can be managed by the producers instead of by USDA headquarters in Washington, D.C.," Tjeerdsma said.

That said, Tjeerdsma said he isn't certain if a farm bill has been drafted yet in the Senate.

Thune's office has already unveiled several farm bill proposals under various titles of the bill, and SDSA President Jerry Schmitz gave some credit to Tjeerdsma for being a driving force behind the bill.

"The senator has been a tremendous advocate for all of us, and sometimes I don't think we recognize what all goes into that," Schmitz said. "And a lot of his education and the foundation for what Sen. Thune's been doing can be traced right back to Lynn."