USDA Gives Lifeline with APH Updates

Farm bill allows actual production yield adjustments for figuring crop insurance when losses are widespread and beyond the control of producers.

USDA has been pretty stellar in rolling out the new farm bill considering the complexities required to roll out several new programs. But the biggest complaint – a call for the agency to update Actual Production History (APH) exclusions – looks to finally get addressed.

Up to this week USDA and Secretary of Agriculture Tom Vilsack had continually said it couldn’t be done in time for the 2015 crop years. And then USDA announces it will move ahead on making the updates for 2015 spring crops (corn, soybeans, wheat, cotton, grain sorghum, rice, barley, canola, sunflowers, peanuts, and popcorn).

APH, allows farmers to exclude yields from exceptionally bad years, such as those brought on by severe weather or natural disasters from their production history when calculating yields used to establish their crop insurance coverage. Nearly three-fourths of all acres and liability in the federal crop insurance program will be covered under APH Yield Exclusion.

Wade Cowan, who farms in Brownfield, Texas, and has experienced significant drought in each of the last four growing seasons, called the rollout a “lifesaver” for soybean farmers in many parts of the country. “It quite literally means the difference between continuing to farm following disastrous years, and being forced out of business,” he said of the lifeline extended by the news.

The APH program is significant given the formula used to calculate crop insurance coverage. Producers are able to purchase coverage based on that farmer's average recent yields. Formerly, a year of bad yields due to severe weather would reduce the yield coverage levels available in future years.

Under the APH program included in the Farm Bill and announced by USDA, yields can be excluded from farm actual production history when the county average yield for that crop year is at least 50% below the 10 previous consecutive crop years' average yield. By excluding exceptionally unusual years, a farmer's overall yield average avoids a disproportionate reduction.

According to Cowan, who also serves as the American Soybean Association first vice president, the APH exclusion takes on additional significance this year, given the decline in prices for many commodities. "Without the APH program, producers who have suffered severe weather would face the double-whammy of low prices and low yield protection," Cowan said.

USDA said its Risk Management Agency and Farm Service Agency staff worked hard to implement several 2014 Farm Bill programs ahead of schedule, such as the Agricultural Risk Coverage, the Price Loss Coverage, Supplemental Coverage Option and Stacked Income Protection Plan. USDA is now able to leverage data from the Agricultural Risk Coverage and Price Loss Coverage to extract the information needed to implement APH Yield Exclusion earlier than expected.

USDA said RMA will provide additional program details in December 2014.

Lucas said he remains “hopeful” that USDA will also work to make the same relief available to winter wheat producers. Paul Penner, National Association of Wheat Growers president and wheat grower from Hillsboro, Kan., also hopes USDA can implement this provision for winter wheat growers yet this year.

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