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Agricultural Act of 2014
2014 Farm Bill
Fact Sheets & Online Resources
for Illinois farmers
Produced and provided by: Illinois Farm Bureau®
Winter 2014/2015
Table of Contents
Commodities Title/Safety Net Overview .................................. 1
Payment Yield Update Options.................................................... 3
Base Acreage Reallocation Options ............................................ 5
Price Loss Coverage (PLC) ............................................................ 7
Ag Risk Coverage-County (ARC-CO) ............................................ 9
Ag Risk Coverage-Individual (ARC-IC) ....................................... 11
Supplemental Coverage Option (SCO) ...................................... 15
Online Resources ............................................... inside of back cover
Note: Farm Bill rules and regulations are subject to change. This document is current as of
the date of publication, but the rules and regulations discussed in it are subject to change.
Illinois Farm Bureau contact: Doug Yoder, Sr. Director of Affiliate and Risk Management
[email protected]
Published: November 20, 2014
Copyright: Illinois Farm Bureau® © 2014
Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Commodities Title/Safety Net Overview
The 2014 Farm Bill was passed on February 7, 2014 and covers five crop years: 2014 –
2018. The bill contains several one-time, irrevocable options for landowners and
producers.
Landowners
1) Payment Yields – landowners may either:
a) Retain the payment yields currently on record on their farms at the Farm
Service Agency (FSA); or,
b) Update payment yields to 90% of the simple average of covered crop yield per
planted acre for the 2008 – 2012 crop years.
2) Base Acreage – landowners may either:
a) Retain base acreage on file with FSA as of 9/30/2013; or,
b) Reallocate base acres according to the ratio of planted acres on each farm for
harvest, haying, grazing and silage from 2009 – 2012, including prevent plant
acres.
See individual fact sheets on Payment Yields and Base Acreage for full details.
Producers – defined as an owner, operator, landlord, tenant, or sharecropper that
shares in the risk of producing a crop and is entitled to share in the crop available
for marketing from the farm, or would have shared had the crop been produced,
including anyone with an interest/share in Conservation Reserve Program acreage.
Producers have a one-time option to choose one of three safety net options per FSA
farm:
1) Price Loss Coverage (PLC)- the default choice if no other option elected;
• Farms choosing PLC are eligible for new crop insurance county-based
supplemental coverage called Supplemental Coverage Option (SCO).
2) Ag Risk Coverage, county coverage (ARC-CO); or,
3) Ag Risk Coverage, individual coverage (ARC-IC)
If no election is made, PLC is the default, and any possible payments for 2014 are
forfeited. See individual fact sheets for full details on PLC, ARC-CO, ARC-IC, and SCO.
Timeline – The timeline to make these choices at FSA offices is as follows:
• September 29, 2014 – February 27, 2015: Payment Yield Update and Base Acre
Reallocation
• November 17, 2014 – March 31, 2015: ARC/PLC Election
• Mid-April – Summer 2015: Annual Enrollment
Once the various sign-up periods expire, the choices made cannot be changed for the
remainder of this farm bill.
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Marketing Loan Program
Regardless of the ARC/PLC selection, access to the Marketing Loan Program is
available including a nine-month nonrecourse loan or Loan Deficiency Payment.
National loan rates remain unchanged for corn, soybeans, wheat and oats.
Eligibility Tests
1) Adjusted Gross Income - Producers whose average AGI exceeds $900,000 are
not eligible to receive payments or benefits from most programs administered
by FSA and the Natural Resources Conservation Service (NRCS). Previous AGI
provisions distinguished between farm and non-farm AGI.
2) Actively Engaged - Producers who participate in the PLC or ARC programs are
required to provide significant contributions to the farming operation to be
considered as “actively engaged in farming.” The new farm bill requires the
USDA to develop and publicize new regulations to define “significant
contribution of active personal management” as part of this determination.
Payment Limits
The total amount of payments received, directly and indirectly, by a person or legal
entity (except joint ventures or general partnerships) for PLC, ARC, marketing loan
gains, and loan deficiency payments (other than for peanuts), may not exceed
$125,000 per crop year.
Conservation Compliance
The 2014 farm bill continues to require an acreage report for all cropland on the
farm. The acreage report is required to be eligible for PLC, ARC, marketing assistance
loans, and loan deficiency payments.
Compliance with Highly Erodible Land Conservation (HELC) and Wetland Conservation
(WC) provisions continues to be required for participation in most FSA and NRCS
programs. These provisions place restrictions on the planting of an agricultural
commodity on highly erodible land or wetlands. In addition, they prohibit the
conversion of a wetland in order to produce an agricultural commodity.
The 2014 farm bill ties premium assistance for crop insurance to compliance with
HELC and WC provisions. If a producer is determined to be out of compliance on any
part of their land, they lose premium assistance (subsidy) on all of their crop
insurance, starting the next crop insurance year - compliance must be met on all of a
producer’s land to retain eligibility for crop insurance premium assistance.
FSA will make HELC/WC eligibility determinations for crop insurance participants
based on NRCS technical determinations of HELC/WC compliance.
Fact sheets, data sheets, listing of state-wide farm bill meetings, and recorded
webinars can be found at www.ilfb.org/farmbill
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Payment Yield Update Options
The safety net provisions contained in the 2014 Farm Bill utilize payment yields and
base acreage established with the Farm Service Agency (FSA) when calculating
benchmarks and potential payments. Landowners are provided a one-time,
irrevocable option to:
1) Retain the payment yields currently established on their farms at FSA; or,
2) Update payment yields to 90% of the simple average of covered crop yield per
planted acre for the 2008 – 2012 crop years.
Considerations:
1) The owner(s) of each FSA farm makes the decision;
2) The payment yield update decision is by crop by farm. You can update all
covered crops on an FSA farm, only certain covered crops, or none for
example;
3) The payment yield update decision is independent of the base acreage
reallocation decision. Per farm, landowners can both update payment yield
and reallocate base, one or the other, or neither;
4) When calculating potential updated yield:
a. A year is excluded from the calculation if no acres were planted to that
covered crop;
b. A “substitute yield” of 75% of the county’s 2008-2012 average yield can
be used if the farm yield is less than the substitute yield. Substitute
yields for all Illinois counties are available at: www.ilfb.org/farmbill
5) Updated payment yields are allowed for all farms. However, only farms
selecting the Price Loss Coverage (PLC) will utilize the updated yields. Farms
selecting ARC-CO or ARC-IC will use previously established payment yields;
6) Even though updated payments yields will only be utilized by PLC farms, all
farms should update payments if the updated yield is higher than the previously
established yield on that farm. Not every farm bill allows the opportunity to
update yields so this opportunity should be utilized if advantageous. Future
farm programs may use these updated yields;
7) If no action is taken, the farm will default to the current payment yields
already established with FSA.
Yield Certification –
1) Yield and production records are not required with the yield certification form
during update process, however, owners must be prepared to submit records
used to certify yields if requested.
2) Use of crop insurance production data to certify is encouraged:
a. The individual farm yields used to develop the farm Actual Production
History (APH) may be used, but not the APH 4-10 year average itself; and
b. Trend-Adjusted yields cannot be used.
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Allowable production/yield evidence includes:
• Crop insurance APH records
• Settlement sheets/scale tickets
• On-farm storage measured by FSA or crop insurance representative
• Livestock feed records
• FSA: loan records, ACRE records, Noninsured Crop Disaster Assistance Program
(NAP)
FSA will not copy or store yield or production records.
The following table contains an example of a corn payment yield update scenario
illustrating the various rules described above.
Decision tools are available to assist landowners in analyzing their payment yield
scenarios. These tools can be accessed at http://fsa.usapas.com/
Fact sheets, data sheets, listing of state-wide farm bill meetings, and recorded
webinars can be found at www.ilfb.org/farmbill
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Base Acreage Reallocation Options
The safety net provisions contained in the 2014 Farm Bill utilize payment yields and
base acreage established with the Farm Service Agency (FSA) when calculating
benchmarks and potential payments. Landowners are provided a one-time,
irrevocable option to:
1) Retain the base acres on file with FSA as of 9/30/13; or,
2) Reallocate the base acreage using the ratio of the 2009-2012 crop years average
planted acres on each farm for harvest, haying, grazing and silage, including
prevent plant acres.
Considerations:
1) The owner(s) of each FSA farm makes the decision;
2) Total base acreage per FSA farm cannot be increased, only reallocated;
3) The base acreage reallocation decision is independent of the payment yield
update decision. Per farm, landowners can both update payment yield and
reallocate base, one or the other, or neither;
4) If base is reallocated, it applies to all covered crops on that farm and takes
effect beginning with the 2014 crop year;
5) All years from 2009-2012 are included regardless of whether or not acres were
planted to a covered crop;
6) Base acres can include double crop acres if the USDA has determined that
double cropping is an established practice in the area. In other areas, if 2
crops were planted on the same acre in the same year, the owner may elect 1
but not both covered crops when calculating the 4-year average of base acres;
7) Total base acres on an FSA farm cannot exceed that farm’s actual cropland
acreage, unless double cropping is an approved practice;
8) If no action is taken, the farm will default to the base acreage allocation
currently established with FSA.
There are two primary alternative approaches to consider when making the base
acreage reallocation decision:
1) Risk Management approach – Consideration would be given to elect base acreage
allocation most closely matching expected planting patterns/crop rotations during
the 2015-2018 crop years to enhance/supplement your risk management coverage;
or,
2) Maximizing farm program payments approach - Use available decision tools to
determine highest likelihood of program payments over time. Consideration
should also be given to the uncertainty of what future farm programs will consist
of, including the unknown ability to reallocate base acreage again in the future.
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The following table contains three examples illustrating the various rules and
considerations described above.
Example 1: Both current base acreage allocation and reallocation percentage are the
same, offering no real option for this landowner. This illustrates that the only
reallocation potential is based on the actual planted acreage ratio from 2009-2012, no
mixing and matching or blending of planted acreage is allowable.
Example 2: Options include; 1) retain current 80 acres of corn base and 20 acres of
soybean base, or 2) reallocate to 50 acres of corn base and 50 acres of soybean base
based on the 4-year ratio of planted acres.
Example 3: This example illustrates that even though there are more tillable acres
than base, base acres cannot be increased. Options include; 1) retain current 50
acres of corn base and 50 acres of soybean base; or 2) reallocate to 75 acres of corn
base and 25 acres of soybean base based on the 4-year ratio of planted acres.
Decision tools are available to assist landowners in analyzing their base acreage
reallocation options. These tools can be accessed at http://fsa.usapas.com/
Fact sheets, data sheets, listing of state-wide farm bill meetings, and recorded
webinars can be found at www.ilfb.org/farmbill
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Price Loss Coverage (PLC)
The 2014 Farm Bill provides producers a one-time, irrevocable choice of one of three
safety net options on each Farm Service Agency (FSA) farm.
For purposes of the 2014 farm bill, producers are defined as an owner, operator,
landlord, tenant, or sharecropper that shares in the risk of producing a crop and is
entitled to share in the crop available for marketing from the farm, or would have
shared had the crop been produced, including anyone with an interest/share in
Conservation Reserve Program (CRP) acreage.
The three safety net options include:
1) Price Loss Coverage (PLC) - the default choice if no other option elected;
2) Ag Risk Coverage, county coverage (ARC-CO); or,
3) Ag Risk Coverage, individual coverage (ARC-IC).
PLC and ARC-CO decision can be made by crop, by farm. For ARC-IC, all covered crops on all
farms in the state will be combined into one benchmark revenue and payment calculation.
If no election is made, PLC is the default, and any possible payments for 2014 are
forfeited.
Price Loss Coverage (PLC)
1) Target price program, modified version of the Counter-Cyclical Program in the
2008 farm bill
2) Reference prices established for the life of the farm bill and will not change
3) Payments made on 85% of base acres if payments are triggered
4) Issues payment if the higher of a) the Market Year Average (MYA) price, or b)
loan rate is below the established reference price for that covered crop
5) The only option that will utilize updated payment yields
6) The only option allowing Supplemental Coverage Option (SCO) eligibility
Reference Prices:
Crop
Reference Price
Crop
Corn
$3.70
Grain Sorghum
$3.95
Soybeans
$8.40
Barley
$4.95
Wheat
$5.50
Rice
$14/cwt
Oats
$2.40
Peanuts
$535/ton
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Reference Price
PLC Example
Assumptions:
• 2014 MYA price = $3.50 (USDA estimate: November 10, 2014)
• Farm’s payment yield = 150 bushels
• Corn base = 100 acres
Payment Calculations:
• Payment rate = $.20/bushel ($3.70 reference price - $3.50 MYA price)
• Total payment = $2,550* ($.20 payment x 150 bushels payment yield x 85
payable base acres)
• Payment per base acre = $25.50
*Payment would be distributed by farm share percentage.
Fact sheets, data sheets, listing of state-wide farm bill meetings, and recorded
webinars can be found at www.ilfb.org/farmbill
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Ag Risk Coverage-County (ARC-CO)
The 2014 Farm Bill provides producers a one-time, irrevocable choice of one of three
safety net options on each Farm Service Agency (FSA) farm.
For purposes of the 2014 farm bill, producers are defined as an owner, operator,
landlord, tenant, or sharecropper that shares in the risk of producing a crop and is
entitled to share in the crop available for marketing from the farm, or would have
shared had the crop been produced, including anyone with an interest/share in
Conservation Reserve Program acreage.
The three safety net options include:
1) Price Loss Coverage (PLC) - the default choice if no other option elected;
2) Ag Risk Coverage, county coverage (ARC-CO); or,
3) Ag Risk Coverage, individual coverage (ARC-IC).
PLC and ARC-CO decision can be made by crop, by farm. For ARC-IC, all covered crops on all
farms in the state will be combined into one benchmark revenue and payment calculation.
If no election is made, PLC is the default, and any possible payments for 2014 are
forfeited.
Ag Risk Coverage-County (ARC-CO)
1) County level revenue protection
2) ARC-CO benchmark revenue and payment calculations will be based on FSA
administrative county, not the county the land is physically located in
3) County revenue benchmark guarantee = 86% of:
a. 5-year rolling Olympic average of county yield; and,
b. 5-year rolling Olympic average of Market Year Average Price (MYA)
4) The crop’s reference price will be substituted for any individual MYA prices
that were actually below the reference price for the benchmark calculation
5) Actual County Revenue = final county yield x final MYA
6) Payments issued if actual county revenue is less than county benchmark
revenue guarantee
7) Maximum payment = 10% of county benchmark revenue for that year
8) Payments will be issued on 85% of base acres
9) Separate benchmark revenue guarantees and payments for each covered crop
10) No annual production evidence required
11) Not eligible to use updated payment yields
12) Not eligible for Supplemental Coverage Option (SCO)
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ARC-CO Example for McLean County, IL for 2014 crop year
County
Yield
MYA
Price
2009
2010
2011
2012
2013
Olympic
Average
186
170
160
110
190
172
$3.70*
$5.18
$6.22
$6.89
$4.46
$5.29
*2009 actual MYA was $3.55, but $3.70 reference price is substituted
•
•
•
•
Use of Olympic average does not include the high or low years, so the county
yields and MYA prices underlined above are the ones used to calculate the
Olympic average
County benchmark revenue = $910/acre (172 Olympic average yield x $5.29
Olympic average price)
County revenue guarantee = $783/acre ($910 benchmark x 86% guarantee)
Maximum payment = $91/acre ($910 benchmark x 10%)
Assumptions:
• MYA price for 2014 = $3.50 (USDA estimate November 10, 2014)
• Final county yield = 180 bushels
• Corn base = 100 acres
Payment Calculations:
• Actual County Revenue = $630 (180 final county yield x $3.50 MYA price)
• Payment Rate = $153/acre ($783 guarantee - $630 final revenue)
• Payment Rate used = $91 (maximum payment since $153 exceeds max)
• Total Payment = $7,735* ($91 max payment x 100 base acres x 85% of base)
• Payment/Base Acre = $77.35
*Payment would be distributed by farm share percentage.
Fact sheets, data sheets, listing of state-wide farm bill meetings, and recorded
webinars can be found at www.ilfb.org/farmbill
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Ag Risk Coverage-Individual (ARC-IC)
The 2014 Farm Bill provides producers a one-time, irrevocable choice of one of three
safety net options on each FSA farm.
For purposes of the 2014 farm bill, producers are defined as an owner, operator,
landlord, tenant, or sharecropper that shares in the risk of producing a crop and is
entitled to share in the crop available for marketing from the farm, or would have
shared had the crop been produced, including anyone with an interest/share in
Conservation Reserve Program (CRP) acreage.
The three safety net options include:
1) Price Loss Coverage (PLC) - the default choice if no other option elected;
2) Ag Risk Coverage, county coverage (ARC-CO); or,
3) Ag Risk Coverage, individual coverage (ARC-IC).
PLC and ARC-CO decision can be made by crop, by farm. For ARC-IC, all covered crops on all
farms in the state will be combined into one benchmark revenue and payment calculation.
If no election is made, PLC is the default, and any possible payments for 2014 are
forfeited.
Ag Risk Coverage-Individual (ARC-IC)
1) Whole farm revenue protection
a. Provides farm level revenue loss coverage, weighted to the producer’s
share of the covered commodities planted, across ALL farms enrolled in
ARC-IC in the state
2) Farm revenue benchmark guarantee = 86% of:
a. 5-year rolling Olympic average of annual farm revenues for all covered
crops on all ARC-IC farms in the state, weighted by planted acreage ratio
b. Annual farm revenue = The higher of the individual farm yield or
substitute yield (70% of county transitional yield) times the higher of the
Market Year Average (MYA) price or loan rate
i. For any year with zero planted acres, an “assigned” yield of 100%
of the county average will be used.
ii. The crop’s reference price will be substituted for any individual
MYA prices that were actually below the reference price for the
benchmark calculation.
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3) Payments will be issued when Actual Crop Revenue is less than the ARC-IC
Guarantee
a. Actual Crop Revenue = Sum of production of each covered commodity
times the higher of MYA price or loan rate
4) Maximum payment = 10% of weighted producer benchmark revenue
5) Payments will be issued on 65% of base acres
6) At least one covered commodity has to be planted for payment eligibility
7) Prevent Plant acres are not included in ARC-IC calculations unless 100% of
covered commodities are Prevent Plant
8) Annual production evidence required for benchmark and actual revenue
calculations
9) Not eligible to use updated payment yields
10) Not eligible for Supplemental Coverage Option (SCO)
ARC-IC Example for 2014 crop year
To simplify, only one FSA farm will be used in this example. In reality, all farms the
producer has an interest in across the state will be combined for benchmark and
actual revenue calculations.
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This farm’s Olympic average (eliminating high and low years) revenue would equal:
• Corn = $829 ($881+$758+$847 divided by 3)
• Soybeans = $690 ($667+$700+$702 divided by 3)
The 2014 planting acre ratio for this farm was 60% corn and 40% soybeans.
•
•
•
Whole farm benchmark revenue would equal $773 ($829 x .60 + $690 x .40)
Farm level ARC-IC revenue guarantee would equal $665 ($773 x 86%)
Maximum ARC-IC payment would equal $77/acre ($773 x 10%)
Assumptions used to calculate 2014 whole farm actual revenue:
• Corn MYA price = $3.50 (USDA Nov. 10, 2014 estimate)
• 180 bushel/acre corn actual yield
• Soybean MYA price = $10.00 (USDA Nov. 10, 2014 estimate)
• 56 bushel/acre soybean actual yield
Payment Calculations:
• Whole Farm Actual Revenue = $602/acre {.60 x ($3.50 x 180) + .40 x ($10.00 x 56)}
• Payment Rate = $63 ($665 revenue guarantee - $602 actual revenue)
• Total Payment = $4,095* ($63/acre payment x 100 base acres x 65% of base acres)
• Payment/Base Acre = $40.95
*Payment would be distributed by farm share percentage.
Fact sheets, data sheets, listing of state-wide farm bill meetings, and recorded
webinars can be found at www.ilfb.org/farmbill
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Supplemental Coverage Option (SCO)
The 2014 Farm Bill authorized a new crop insurance supplement called Supplemental
Coverage Option (SCO). SCO is designed to add to, or supplement, the coverage
producer’s purchase for their operations thus reducing the deductible left from their
underlying crop insurance policy.
SCO is only available for crops that choose the Price Loss Coverage (PLC) safety net
option in the 2014 Farm Bill. Any crop on a farm that elects either of the Ag Risk
Coverage (ARC) revenue options in the farm bill is not eligible for SCO. Thus, analysis
of SCO needs to be incorporated into producer’s ARC/PLC decision process.
Considerations:
1) County-based area supplemental coverage
2) Only crops on farms that elect PLC are eligible for SCO coverage
3) Producers must first purchase Yield Protection (YP), Revenue Protection (RP),
or Revenue Protection with the Harvest Price Exclusion (RP-HPE)to be eligible
to purchase SCO
4) 65% of SCO premiums will be paid by the Risk Management Agency (RMA)
5) SCO mimics the underlying crop insurance coverage, for example:
a. If YP is purchased, SCO will provide supplemental county yield coverage;
b. IF RP is purchase, SCO will provide supplemental county revenue
coverage that automatically uses the higher of the base or harvest crop
insurance price just as RP does;
c. If RP-HPE is purchased, SCO will provide supplemental county revenue
coverage that only uses the base crop insurance price
6) SCO coverage begins at 86% of county yield or revenue and ends at the
producer’s underlying crop insurance coverage level. If producer purchases:
a. 85% coverage level, SCO provides 1% additional coverage (86% - 85%);
b. 80% coverage level, SCO provides 6% additional coverage (86% - 80%);
c. 75% coverage level, SCO provides 11% additional coverage (86% - 75%);
d. 70% coverage level, SCO provides 16% additional coverage (86% - 70%);
e. And so forth
7) Given that SCO is a county-based coverage, it will operate similarly to areabased crop insurance plans now called Area Risk Protection Insurance (ARPI),
formerly known as Group Risk Plan (GRP) and Group Risk Income Protection
(GRIP), meaning:
a. SCO will utilize the same “Expected County Yields” as ARPI;
b. SCO will utilize the same base and harvest prices as ARPI;
c. SCO will not offer replant provisions;
d. SCO will not offer Prevent Plant provision;
e. SCO will not offer quality loss coverage such as aflatoxin for corn and
vomitoxin for wheat; and,
f. One distinct and important difference between SCO and ARPI is that SCO
will not offer the multiplier (protection level) that ARPI offers.
15
8) Even though SCO needs to be incorporated into producer’s farm bill safety net
ARC/PLC decision, producer’s will purchase SCO through crop insurance
providers since it is a crop insurance tool, not through the Farm Service Agency
9) Since SCO is a crop insurance tool, it will not be subject to a) the 3-year
Adjusted Gross Income eligibility requirement, and b) the payment limitations
that ARC/PLC are subject to
10) Another distinction between SCO and ARC/PLC is SCO coverage will be on
planted acres and actual production as compared to base acreage and
established payment yields that ARC/PLC coverage is based on
11) If you plant a crop without base on a farm you may purchase SCO for that
crop on that farm since you did not elect ARC on that crop, as there is no
base
2015 Availability in Illinois
• Available in all Illinois counties for corn and soybeans
• Available in 28 Illinois counties for wheat:
•
•
•
•
•
•
•
•
•
•
•
Bond
Clay
Clinton
Crawford
Edwards
Franklin
Greene
Hamilton
Jackson
Jefferson
•
•
•
•
•
•
•
•
•
•
Kankakee
Lawrence
Livingston
Macoupin
Madison
Marion
Mason
Monroe
Montgomery
Perry
•
•
•
•
•
•
•
•
Randolph
Richland
Schuyler
Shelby
St. Clair
Washington
Wayne
White
Beginning in the 2016 crop year, the (RMA) will expand SCO coverage into more
areas, more crops, and to make SCO coverage more practice-specific such as
irrigated vs. non-irrigated
Special Consideration for Wheat for 2015 Crop Year
• The deadline to purchase crop insurance, including SCO, for wheat for the 2015
crop year was September 30, 2014. To allow producers additional time to make
an informed decision on ARC/PLC, producers are allowed to withdraw SCO
coverage by the earlier of their acreage reporting date or December 15, 2014
without penalty or being charged any premium.
• After this one-time exemption for 2015 crop year fall-planted wheat, if SCO is
chosen on a farm that elected ARC on that same farm and crop, the SCO
coverage will be cancelled, and the producer forfeits 20% of the SCO premium
to cover administrative expenses. The producer’s underlying policy will remain
in effect.
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SCO Example
Assumptions used for example:
• Revenue Protection (RP) was purchased at 80% coverage level
• The Trend-Adjusted Actual Production History (TA-APH) for this farm = 190
bushels per acre (bpa)
• Expected county yield for SCO = 180 bpa
• 2014 crop insurance base price = $4.62
Calculations:
• Expected farm revenue = $878 (190 bpa x $4.62)
• RP guarantee = $702 (190 bpa x $4.62 x 80% coverage level)
• Expected county revenue = $832 (180 bpa x $4.62)
• SCO trigger = $715 (180 bpa x $4.62 x 86% coverage trigger level)
• SCO lower coverage band = $665 (180 bpa x $4.62 x 80% coverage level)
• SCO coverage range = $50/acre ($715 SCO trigger - $665 lower coverage band)
• Maximum SCO payment = $53 (190 TA-APH x $4.62 x 6% SCO coverage band)
SCO claim calculations:
• 2014 harvest price = $3.49
• Final county yield = 200 bpa
• Final county revenue = $698 ($3.49 x 200 bpa)
• $715 SCO trigger - $698 final county revenue = $17 shortfall
• Percentage shortfall = 34% ($17 shortfall out of $50 band of coverage)
• SCO payment = $18/acre ($53 maximum payment x 34% shortfall)
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Independent Claim Payments
Possible SCO claims will not offset or reduce any possible claims from the underlying
crop insurance coverage producers may have, and vice versa. The following table
illustrates the four possible claim payment outcomes when SCO is combined with
Revenue Protection (RP) as an example:
Fact sheets, data sheets, listing of state-wide farm bill meetings, and recorded
webinars can be found at www.ilfb.org/farmbill
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Notes
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Notes
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Notes
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Notes
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Illinois Farm Bureau 2014 Farm Bill Fact Sheets
Online Resources
• ILFB Farm Bill Page: www.ilfb.org/farmbill
 Fact sheets
 Data sheets for all Illinois Counties (corn, beans, wheat, oats, sorghum):
o Substitute Yields for Payment Yield Update Option
o ARC-CO Benchmark, Revenue Guarantee Data, & Max Payments
o ARC-IC Assigned & Substitute Yields
 Recorded webinars
 PowerPoint presentation
• farmdoc Farm Bill
Toolbox: http://farmbilltoolbox.farmdoc.illinois.edu/index.html
• FSA Farm Bill Page: www.fsa.usda.gov/arc-plc
• Online Decision Tool: http://fsa.usapas.com/
• RMA Farm Bill Page: http://www.rma.usda.gov/news/currentissues/farmbill/
• RMA Crop Insurance Decision
Tool: http://prodwebnlb.rma.usda.gov/apps/CIDT/