Farmers question legality of Farm Service Agency calculation of ARC-CO yields


By Jeff L. Todd and Jeremiah L. Buettner

Once again, a newly created program from the 2014 Farm Bill is being scrutinized by farmers who question the legality of how it is being implemented.

The Farm Service Agency’s county-based Area Coverage (ARC-CO) program is one of a few programs under the 2014 Farm Bill offered in lieu of direct payments formerly available through FSA. Under the ARC-CO program, agricultural producers are eligible for payments based on a statutory formula that compares historical yields and prices against the crop year’s national average price and the farmer’s county’s actual yield of the covered commodity. Both the statute and the regulations require county yields to be calculated based on county production and county planted acres.

The issue of legality was recently raised when farmers in eastern Colorado obtained FSA’s county data and questioned whether yields were properly calculated under the provisions of the 2014 Farm Bill and the applicable regulations. The information they obtained reveals that – for many eastern Colorado counties – yields were not calculated based on actual county production divided by county planted acres as required by ARC-CO rules. It appears that in some of these eastern Colorado counties the yields used by FSA for ARC-CO are much too high, leading to no payments or deflated payments.

In addition, a closer look of the 2014 crop year information provided by the FSA reveals that numerous county yields were not only unreasonably high, but had identical yields. For example, Adams County, Baca County, Cheyenne County, Kit Carson County, and Washington County each had an identical purported county yield of 192 bushels per acre for irrigated corn.

Jeff Todd, a nationally recognized agricultural lawyer and leader of the Ag & Equine Industry Group at McAfee & Taft, believes it is incredibly unlikely that these counties have identical actual county yield.

“I’m no statistician, but those counties all having the exact same yield seems about as unlikely as my good friend KC Jones, a nine-time NFR steer wrestler from Las Animas, Colorado, has of winning a dance contest,” said Todd. “It is obvious that FSA ignored the ARC-CO requirements for calculating actual average county yields and simply pulled these numbers out of a hat using data from various counties.”

Widespread impact on agricultural producers likely

The issue is not limited to corn by any means, or even Colorado. FSA data shows clusters of counties with unlikely identical crop yields across the country and across eligible crops. To review FSA data for a specific state, county and crop, click here.

When asked whether there would be legal standing to challenge FSA’s actions, Todd said he believed there was. “ARC-CO is very similar to the old GRIP crop insurance plan,” said Todd, referring to the Group Risk Insurance Protection policies once offered by the Risk Management Agency. “Like GRIP, the ARC-CO statute and regulations require actual county yields to be calculated a certain way, and FSA isn’t free to throw out that formula in favor of something they like better. We fought RMA when they did that with GRIP county yields and won, so there’s certainly precedent to challenge FSA’s ARC-CO county yields.”

Next steps for impacted farmers

The legal team at McAfee & Taft has already been in contact with several producers about legal action against FSA. As he has analyzed the problem, Todd is encouraging farmers who believe they should have received an ACR-CO payment or higher payment based on FSA’s artificially inflated county yields to contact McAfee & Taft as soon as possible, as the federal government puts short deadlines on challenging its actions and it is possible that waiting too long will waive the ability to obtain a higher payment. The firm has developed an affordable way for farmers to join together and challenge FSA’s arbitrary actions.

This alert has been provided for clients and friends of McAfee & Taft A Professional Corporation. It does not provide legal advice, and is not intended to create a lawyer-client relationship. Readers should not act upon information in this alert without seeking professional counsel.