The following is an update on ASA’s work on the ARC-County Option yield discrepancy issue from ASA Washington Office Director John Gordley.

As you know, the American Soybean Association (ASA) has been working with National Corn Growers Association (NCGA), American Farm Bureau Federation (AFBF), National Association of Wheat Growers (NAWG) and other commodity organizations to address discrepancies in county yields and payments under the Agricultural Risk Coverage program’s county option (ARC-CO).

These discrepancies came to light last October, when payments were made for 2014 crops, the first year under the Agricultural Act of 2014 (AA-14), also known as the farm bill. The most notable differences were in corn yields and payments in several counties in North Dakota.  Additional concerns have been raised by corn producers in South Dakota and Colorado.

There is evidence that the number of affected counties may be more significant for the 2015 corn crop, for which payments will be made in October 2016.  We have requested county yield data for the 2014 and 2015 soybean and wheat crops, but the problem to date appears to focus on corn.  However, any unresolved problem for one crop will raise concerns about the viability of the ARC-CO program as a whole, and should be addressed as soon as possible.

The cause of the problem is the “cascade policy” for establishing county yields adopted by the Farm Service Agency (FSA) after AA-14 was enacted. Currently, FSA requires that a county’s published National Agriculture Statistics Service (NASS) yield be used, which requires that at least 30 producer surveys be returned or that the returned surveys represent at least 25 percent of a county’s harvested acreage for the crop.  If one of these conditions isn’t met, the county’s Risk Management Agency (RMA) yield is used. Since RMA yields are often higher than NASS yields, payments to producers in RMA counties can be significantly lower than payments to producers in counties with NASS yields.

Since there is no legislative requirement or guidance for this policy, FSA is able to change it to provide more consistent yields and payments between counties in the same state. An alternative approach proposed by the North Dakota Corn Growers Association would blend NASS yields in adjacent or contiguous counties to establish yields in counties that don’t meet either of the requirements for a published NASS yield.  In cases where there are no contiguous counties, the FSA State Committee would use NASS yields in comparable counties.

Our group met with FSA officials a week ago to discuss this approach as a way to make ARC-CO more defensible, not only against farm program opponents but against critics in Congress, including Ranking Member Peterson, who have suggested eliminating the program in the next farm bill.

FSA raised the concern that modifying county yields could bring unwanted attention to the difference in yields that producers report to both NASS and RMA. We pointed out that these anomalies could be noticed even if the proposed change is not made, and that it would be better to fix the problem now. FSA indicated it would be beneficial to have direction from Congressional leaders on this issue.

We subsequently met with Ranking Member Debbie Stabenow’s staff and will meet with Senate Agriculture Chairman Pat Roberts’ staff next week to discuss ways to address the issue.

In addition, Sen. John Hoeven included an amendment to the FY-2017 Agriculture Appropriations bill during the full Committee mark-up that would establish a pilot program for 2016 crops under which FSA would designate counties where NASS yields in comparable contiguous counties would be used to mitigate differences that would otherwise exist. We have been in touch with Sen. Hoeven’s staff, and will continue to work with the Agriculture Committee staffs to encourage FSA to adopt the broadest possible approach to deal with ARC-CO yield anomalies, based on the pilot program or simply by using its authority to do so.

The ASA D.C. office will keep you updated on the meeting with the Roberts staff, and on subsequent discussions with the Stabenow staff and others, on whether they think a letter to U.S. Department of Agriculture Secretary Tom Vilsack would be appropriate to urge the department to make a change in FSA’s current policy.