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Farm bill program decision time

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Farm operators and land owners will have several one-time choices to make in the coming months regarding their farm program participation for the 2014-2018 crop years. The new farm program options are part of the commodity title of the new farm bill, which is being implemented by USDA. Most crop commodity programs will be in effect for the 2014 crop year. Since the commodity farm program choices are for five years, land owner approval and signatures will be required on all cash and share rented farm land.

Farm program sign-up will take place at local Farm Service Agency (FSA) offices, and will likely be separated into two parts. The first sign-up period will likely start in early fall, and will be for the purpose of reallocating crop base acres, and potentially updating farm program payment yields. The second sign-up period at local FSA offices will be to make the actual farm program choice on each FSA farm unit, for each eligible commodity. This sign-up period will likely start in late fall 2014, and continue into early 2015. In the coming months, farm operators and land owners will need to to research and evaluate the various farm program options and alternatives that will be available.

Following are some of the choices that producers and land owners will need to consider at the farm program sign-up times later this year.

  • Reallocation of Crop Base Acres.

All farm program payments for both the new ARC and the PLC programs will be calculated on crop base acres, rather than on year-to-year planted crop acres. Producers will be given a one-time opportunity to update crop base acres on a FSA farm unit, based on the average planted acres from 2009-2012, or they can choose to continue with the crop base acres that existed under the last farm bill. The total reallocated crop base acres for 2014-18 cannot exceed the total crop base acres that existed in 2013 farm program.

  • Updating Farm Program Payment Yields.

Producers that chose the new PLC program will have a choice of keeping their existing counter-cyclical payment yields on a farm unit from the previous farm program, or updating the payment yields. Updated yields will be 90% (.90) of the 5-year (2008-2012) average crop yields for eligible each crop on a farm unit. The most recent county 5-year average yield for a crop, dropping the highest and lowest yields, will be used for the County ARC program.

  • ARC or PLC Program.

Producers and land owners will have a one-time choice between the Agriculture Risk Coverage (ARC) program, and the Price Loss coverage (PLC) program, for each eligible crop, on each individual FSA farm unit. If no choice is made, the FSA farm unit will be placed in the PLC program for 2015-2018, and that farm unit will have no farm program coverage for the 2014 crop year, which could be a big loss at current crop price trends. The ARC program is crop revenue-based (yield and price), while the PLC program is based on only crop reference prices.

PLC program payments will be made if the 12-month market year average (MYA) price falls below the established reference price (target price) for a given crop. The marketing period for the 12-month MYA price for corn and soybeans is Sept. 1 in the year that the crop was produced until Aug. 31 of the following year. PLC payments would be made in October of the following year, and will be made on 85% of eligible crop base acres for a given crop.

  • County or Individual ARC Program.

Producers and land owners that choose the ARC program option will have another choice to make, whether to have benchmark revenues and potential ARC payments determined by county-level yields (ARC-CO) or individual farm-level yields (ARC-IN). There are several aspects to consider regarding this decision.

ARC-CO program payments will occur for a given crop when the actual county-level calculated revenue (county yield x MYA) is below 86% of the county benchmark revenue for that year. The maximum ARC-CO coverage is 10%, from 76 to 86%, of the county benchmark revenue (yield x price) for a crop, with potential payments made on 85% of crop base acres. The ARC-IN program combines the weighted revenue (farm yield x MYA) for all crops on a farm unit to calculate payments, rather than the crop-specific approach used in the ARC-CO program. Payments in ARC-IN program are also limited to 10% of the weighted benchmark revenue for the farm, with potential payments made on 65 percent of crop base acres.

Producers and land owners that opt for ARC-CO program have the opportunity to choose between the ARC-CO program and the PLC program for each eligible crop on a FSA farm unit. Those choosing the ARC-IN program will need to have all crops on the farm unit in that program. Any potential PLC or ARC payments for the 2014 crop year will not occur until October 2015.

 

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