Reduction in ARC/PLC Payments
Neiffer: "It is actually going to apply to almost all program payments that farmers will collect this year and next year. The percentage that will apply is 7.3 percent and that will apply for 2014 and 2015. Because we think how it works is that the percentage is based on the year that the government becomes obligated for the program payment. So both 14 and 15 were signed up this year so they are subject to the 7.3 percent reduction. Therefore a farmer that might have been getting a maximum of $125,000 payment is actually going to be getting approximately $116,000 and then everybody else under that maximum amount will have a 7.3 percent haircut applied to whatever their payments are. Now if a farmer is also enrolled in CRP — Conservation Reserve Program — there is no haircut on that. That is actually a contract between the landowner and the government so there is no haircut on that. These are program payments so that is why there is a percentage haircut on this versus nothing on CRP."
This reduction also applies to other program payments such as Dairy Margin Protection Payments. ?
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