Update on ARC-CO Yield Issue

Jul 28, 2016

The American Soybean Association (ASA) has worked with several other farm organizations to address discrepancies in county yields and payments under ARC-CO. These differences 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 number of affected crops and counties may be more significant when payments are made for 2015 crops in October 2016. Continued discrepancies in yields and payments will make the ARC-CO program, in which 97 percent of soybean base acres are enrolled, subject to criticism as debate begins on the next farm bill in 2017.

The cause of the discrepancies is the “cascade policy” for determining county yields adopted by FSA after AA-14 was enacted. Currently, FSA requires that a county’s NASS yield be used when at least 30 producer surveys are returned or when returned surveys represent at least 25 percent of a county’s harvested acreage for a crop. If neither of these conditions is met, the county’s RMA yield is used.  Differences between yields in neighboring counties can occur due to weather and agronomic reasons, and are often significant.  However, since reported RMA yields are frequently higher than NASS yields, payments to producers in counties where RMA yields are used can be substantially lower than payments in counties using NASS yields.

There is no legislative requirement or guidance for the cascade policy, and FSA could change it if a way can be found that would make yields and payments more consistent between counties. One suggestion would be to use NASS yields in adjacent counties to establish yields in counties that don’t meet either of the requirements for a published NASS yield.  In situations where there are no adjacent counties, the FSA State Committee could use NASS yields in comparable counties. However, after several meetings with ASA and other farm organizations, FSA decided not to change their policy, stating that it could create “winners and losers” or increase the cost of the program. They also expressed concern that making a change in the middle of the current farm bill could bring unwanted attention to differences in yields that producers report to both NASS and RMA.

ASA’s Voting Delegates adopted a policy resolution in February 2016 to support using RMA rather than NASS yields under the ARC-CO program. Since FSA has declined to change its current approach, ASA leaders decided at the just-completed July Board meeting to encourage farmers to submit NASS surveys in order to reduce the number of county yield discrepancies and make ARC-CO more defensible in advance of debate on the next farm bill. In addition, Senator Hoeven (R-ND) amended the FY-2017 Agriculture Appropriations bill to establish a pilot program for 2016 crops under which FSA would designate counties for which NASS yields in adjacent or comparable counties would be used to mitigate differences that would otherwise exist.  ASA will support adoption of the Hoeven amendment in Conference later this year if efforts to have FSA change its current policy are not successful.