A couple weeks ago, NCGA rolled out their farm program proposal: ADAP, or Agricultural Disaster Assistance Program. Like every other government program, it has its ins and outs and will undoubtedly work better for some than for others. To help dissect the proposal, I asked Bill Graff - an Illinois farmer who spent nearly 8 years as head of Illinois FSA, administering such programs – for his take on it. As he says, "do not go out and buy a farm based on what I think may or may not happen." A great caveat, for all of us and for life in general. Also, Bill blogs here. And he podcasts. It's good stuff.
So, here, the first of a two-blog series on NCGA's ADAP. Bonus points for you if you can follow all the acronyms. Also, points mean nothing.
Remind us what ACRE does?
ACRE is a “big” FSA farm program. What I mean by that is bigger FSA farms tend to sign up with ACRE. Only 137,900 farms took the ACRE option, but these are 13% of the base acres. Illinois FSA alone has 179,000 farms give or take a few. Smaller farms did not enroll and having to give up some of your direct payments made this a non-starter down south in cotton and rice country. If you also did not plant corn, soybeans, or wheat on your base acres but had hay or pasture ground on these base acres, why take the cut in direct payments and not get any benefit in return? So ACRE has kind of worked, but at 13% of base acres, it's not been a real big hit with the farm crowd either.
And the nitty-gritty of ADAP?
Harvest price is different. This is a big one. ACRE used Sept. 1 to Aug. 31, which is the whole marketing year. ADAP uses just October price, like the fall harvest price for crop insurance. With ACRE, you had to wait 15-plus months for a payment; with ADAP, it could be in as little as 4 to 5 months.
**ADAP uses crop reporting districts instead of State averages. Not on the county level but closer to individuals than statewide averages. Revenue for ADAP is a 5-year Olympic average, which is, you throw out the high and low years and average the other three. ACRE was 2-year average price and 5-year Olympic average yield, but was limited by a 10% move either up or down. ADAP has no limit, but Olympic averages tend to reduce drastic moves anyway.
**Maximum payment with ACRE was 25% of revenue, but ADAP has a 10% limit of your revenue. So if you have revenue of $750 per acre, maximum payment limit is $75 per acre.
**With ACRE, you had to give up a percentage of your loan rate also; ADAP does not propose this.
**ADAP does away with the SURE disaster program and direct payments.
**ACRE was capped at the lower end of your planted acres, or .833 of you base acres. ADAP is on your planted acres, and I think they limit it to your base acres; I could be wrong on that.
**Both ACRE and ADAP require a farm to have a loss to get a payment. You do not have to have disaster declarations or a 50% loss like the SURE program does. ADAP is purely PRICE x YIELD.
Check back Thursday, when Bill will dissect the program further: who it might benefit, what Cotton might think, what Washington might do. Or might not do. Or might not know what to do.