News

USA: Farm safety net effective reference prices

Maize (Corn)
Canola Seed & Rapeseed
Published Jul 3, 2022

Tridge summary

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.

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
By clicking “Accept Cookies,” I agree to provide cookies for statistical and personalized preference purposes. To learn more about our cookies, please read our Privacy Policy.