The 2014 Farm Act Agriculture Risk Coverage, Price Loss Coverage, and Supplemental Coverage Option Programs' Effects on Crop Revenue

Abstract

The 2014 Farm Act provides eligible U.S. farmers with new commodity supports in the Agriculture Risk Coverage (ARC), the Price Loss Coverage (PLC), and the Supplemental Coverage Option (SCO) programs. These programs help producers with revenue losses generally not covered by traditional crop insurance policies. Interactions, both among these programs and between these programs and the Federal Crop Insurance (FCI) program, determine the nature and magnitude of support avail - able to producers. This report provides an analysis of these programs with a focus on how various combinations of the programs impact producer revenue and its variability, producer well-being, and expected program costs. The report finds that these programs’ effectiveness are influenced by historical prices, expected prices, and FCI coverage rates. High historic crop prices combined with low expected prices since the enactment of the 2014 Farm Act led to higher enrollment of producers in the ARC program in 2015 relative to that in the SCO program.