Understanding the Agriculture Improvement Act of 2018

The Agriculture Improvement Act of 2018 was signed into law on December 20, 2018.  Pieces of legislation are signed into law at the state and national level frequently.  What’s often more challenging is figuring out what impact legislation may have on you and your individual situation.

At over 800 pages in length, the farm bill takes effect for 2019 crops and could mean a variety of things for you.  Are you prepared?  Throughout this article, I will discuss a few of the topics to consider as you gear up for the future.

In the 2014 farm bill, farmers had the opportunity to enroll in one of two programs – either Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC).  The 2018 bill reauthorizes ARC and PLC but differs slightly.  Farmers will again be required to make a new election to obtain either ARC or PLC for the 2019-2020 crop years.  Failure to do so for 2019 will make you ineligible for 2019 payments and you will then revert back to your 2014 election for subsequent years.  However, there is flexibility to modify your elections in the 2021-2023 crop years.  The ability to calculate and determine the value of either the PLC or ARC programs should be built into your marketing and risk management strategy on an annual basis.


According to the USDA, “PLC program payments are issued when the effective price of a covered commodity is less than the respective reference price for that commodity. The effective price equals the higher of the market year average price (MYA) or the national average loan rate for the covered commodity.”

Intended to allow for increases in reference prices as market conditions improve, the new farm bill set the PLC payment rate as the difference between “effective reference price” and effective price.  This effective reference price is calculated as the greater of either 85% of the 5-year Olympic average price and the PLC Reference Price established in the 2014 farm bill.  Be sure to review what PLC means for you and the impact it may have on your marketing considerations.


The USDA states, “The ARC-CO program provides revenue loss coverage at the county level. ARC-CO payments are issued when the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for the covered commodity.”

Family Members

The 2018 farm bill extended the definition of family members that could qualify for farm program payment purposes if there are no non-family member owners.  Now included are first cousins, nieces, and nephews.  According to the Congressional Budget Office (CBO), an estimated additional $4 million per year in payments are expended under this definition.

Other Provisions:

  • This bill legalizes the production of hemp as an agricultural commodity which can be used to make rope, fabric, paper, and other products. Though hemp is no longer considered a controlled drug, marijuana remains in the controlled drug category.
  • The Margin Protection Program for dairies was discontinued, but Dairy Margin Coverage was introduced.

What should you do?

The time is now to look into the benefits available to you through the new farm bill.  Everyone’s personal situation is different, but you want to make sure you’re taking everything into consideration and positioning yourself in the best possible way.  I invite you to reach out to your Adams Brown Advisor or me to discuss your individual scenario.