One Way of Tweaking Reference Prices
University of Illinois provided an article on how changes to Reference Prices may affect the payments for major crops.
University of Illinois has a daily FarmDoc article that they issue on various farm issues. In today’s article, they discuss how tweaking reference prices may change payments for various major crops.
The article shows the history of PLC payments per acre for the major crops. Their estimates of historic PLC payments per acre and frequency for 2014-2022 is as follows:
Soybeans - zero and 0%
Corn - $10 and 56%
Wheat - $15 and 67%
Seed Cotton - $28 and 60%
Long-grain Rice - $93 and 89%
Peanuts - $123 and 89%
If reference prices were simply increased by 5%, the payments and frequency would increase dramatically. Currently, there are no funds in the Farm Bill to simply increase reference prices across the board.
Another option would be to drop reference prices by 10% and then allow them to increase up to 135% from the current 115% limit. This would result in about the same amount of payments for soybeans, corn and wheat, but would substantially decrease expected payments for the other crops.
The bottom line is from a political standpoint, we may need to have separate ways of determining reference prices in order to make any major changes to reference prices. We likely will not know for at least another year since it is likely that we will have a one-year extension on the current Farm Bill.