Policy Design Case Study: EQIP and the Inflation Reduction Act

A recent farmdoc daily article discussed the increasing pessimism surrounding corn and soybean return prospects for the current 2024 crop year (see farmdoc daily, July 30, 2024). This is mainly driven by continued declines in corn and soybean prices as growing conditions through July across the US suggest good to excellent crop yields, on average. Today’s article examines potential revenue insurance payments for corn and soybeans for a range of prices and yields around current expectations. Price declines thus far would not trigger payments from individual products like RP and RP-HPE at even their highest coverage level unless small yield losses also occur. Payments would however be triggered for the supplemental plans, SCO and ECO, if county yields equal, or come in below, expected levels. Given the lower revenue guarantees for 2024 compared with 2022 and 2023 because of lower prices, downside return risk is higher even for farms with revenue insurance at high coverage levels.