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Agvocate: The storm is brewing

Many have heard about the issues farmers have had with payments under the Agricultural Risk Coverage program, and it appears to be a widespread problem. I wanted to take the opportunity with this column, however, to make sure I get the word out to any farmers who might not realize the problem. I also want to explain a little about the potential remedies for farmers.

As most of you know, after the last farm bill, congress made some sweeping changes to our farm policy, eliminating direct payments. Farmers had to choose between Price Loss Coverage or Agricultural Risk Coverage. Under PLS, farmers receive payments if the national average marketing year pricefor a commodity they have covered is below its reference price. Under ARC, farmers had to choose between the County Option and the Individual Option. Under the County Option, farmers receive payments if the ARC-County actual crop revenue is less than the ARC-County revenue guarantee.

Unless you’re a farmer who had to deal with this, it might sound complicated. The simple part is that under the ARC program, the actual county revenues were supposed to be based on actual average county yields. The farm bill specifies how county revenues are calculated, stating “the amount of the actual crop revenue for a county for a crop year of a covered commodity shall be equal to the product obtained by multiplying ... the actual average county yield per planted acre for the covered commodity” by the price (which is determined in a couple of ways). The key word is “actual.”

Apparently, the U.S. Department of Agriculture did not have the data it needed from the National Agriculture Statistics Service, so it relied on the Risk Management Agency for yield data. RMA’s calculation of yield is based on total production of crop insurance records, divided by the number of insured acres in the county. The problem, as many farmers see it, is this way of calculating yields painted a picture of bumper crops in some counties. If the data shows an especially high yield in your county, you are not going to get a payment.

A recent story by Chris Clayton in The Progressive Farmer noted “Officials from North Dakota complained about that procedure last month after RMA data led to a record 2014 yield in one county, causing an estimated loss of $7.5 million in payments in that one county.”

Obviously, this is a big deal for many farmers. So, what can you do about it? I have heard some discussion of lawsuits, particularly class actions, but unless I am missing something (and that has happened before), the claims regarding these issues will need to be brought through the administrative process of USDA’s National Appeals Division. I have written in the past about this process, so I won’t go into great detail. If USDA does not decide it acted arbitrarily (and it actually does decide that more often than you might think), there is a chance to get to federal court after the NAD process.

On the bright side, it is possible for farmers to join together in the appeal process. This is not quite the same as a class action, but our firm has handled many NAD appeals in which we have combined a group of farmers with a similar issue and it made the process much more cost effective for them. If you are enrolled in the ARC program I encourage you to review FSA’s yield data, and it might be time to talk to an attorney.