Tridge summary
The article explores the impact of the Agriculture Improvement Act of 2018's escalator clause on the Price Loss Coverage (PLC) program, focusing on five crops from the 2014 crop year onward. It reveals that the escalator would have raised reference prices and PLC payment rates for sorghum, wheat, and especially corn and soybeans, had it been in effect earlier. Despite not impacting long grain rice, it highlights a potential increase in reference prices for these crops in the 2024 crop year, reducing the need to raise statutory reference prices and aligning program commodities' reference prices with market prices. This adjustment could significantly increase the farm safety net's budget, reflecting the escalator's potential to change farmers' program decisions and providing more support when market revenue significantly increases for at least three years, as seen with corn and soybeans.
Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.
Original content
The Agriculture Improvement Act of 2018 initiated an escalator clause for the farm safety net’s reference price. We evaluate how this escalator would have influenced payments by the Price Loss Coverage (PLC) program from 2014 forward, the first crop year PLC was implemented. Five crops with a range of relationships between reference prices and market prices are examined: corn, soybeans, wheat, sorghum, and long grain rice. The escalator would have increased reference prices and thus PLC payment rates for sorghum, wheat, and, especially corn and soybeans over the 2014 farm bill crop years of 2014-2018. There is a very good likelihood that the escalator will increase corn, soybean, and sorghum reference prices starting with the 2024 crop year. The reference price escalator reduces the need to raise statutory reference prices. Overview – Reference Price Escalator The effective reference price for a crop year is the higher of (a) the statutory reference price stated in the 2018 ...
Source: Agfax
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