Under section 11003 of the 2014 Farm Bill states that producers who the Agriculture Risk Coverage (ARC) are not eligible for coverage under the Supplemental Coverage Option. Section 1115 of the 2014 Farm Bill required producers to make a irrevocable election whether to chose ARC or Price Loss Coverage under section 1116 for the 2014 through 2018 crop years.
In section 1107 of the 2018 Farm Bill, Congress allowed producers to make new elections in 2019 regarding whether they want Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) for the farm serial number and crop at the Farm Service Agency (FSA). The problem is that FSA has not announced the election date.
The Risk Management Agency (RMA) issued Manager’s Bulletin: MGR-19-003, to address this issue. For the 2019 crop year only, RMA has determined that producers with sales closing date of February 28 and earlier can cancel their SCO policy by March 15, 2019. Producers with SCO can file and ARC/PLC acreage intention report by March 15, 2019, that would adjust the acreage report to include the ARC or PLC election. The number of acres with the intention of PLC will be the number of acres insured under SCO regardless of the actual elections made with FSA. If the producer does not file an ARC/PLC acreage intention report, the SCO will cover all acres as though the producer elected PLC. RMA stated that the premium penalty in section 4(b) of the SCO Endorsement would not apply.
ANALYSIS – For the most part, policies for which SCO is available are codified in the regulations and they state that they may only be canceled by the cancelation date, which for most policies is the sales closing date. Therefore, it is unclear the legal basis for allowing producers to cancel policies after the cancellation date. The bulletin fails to address this issue. MGR-19-003 also fails to address what happens if the producer later elects ARC by the FSA election date. Under section 508(c)(4)(C)(iv) of the Federal Crop Insurance Act, the producer is ineligible for SCO and ARC and this provision cannot be waived. However, under MGR-19-003, after March 15, 2019, an election of PLC is presumed and allows for SCO coverage for all acres. The bulletin does not specify whether the SCO policy would be voided if ARC is later elected to avoid a violation of the statute.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.