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Farm Bill Sign Up Extended

USDA has extended the deadline to update base acres and yields under the new farm bill until March 31st. The original deadline for landowners to make initial decisions related to the new farm safety net was Friday February 27, 2015.

U.S. Secretary of Agriculture Tom Vilsack made the announcement saying it is an important decision for producers, because the programs provide financial protection against unexpected changes in the marketplace.

The Secretary says USDA is working to ensure landowners and farmers have the time, the information, and opportunity to review their data, and to visit the Farm Service Agency to make solid informed farm bill decisions.

If no changes are made to yield history or base acres by March 31, 2015, the farm’s current yield and base will be used. A program choice of ARC or PLC coverage also must be made by that same date or there will be no 2014 payments for the farm and the farm will default to PLC coverage through the 2018 crop year.

Farm Program Sign Up Deadlines & Decision Aids

Farm Program Sign Up Deadlines & Decision Aids
Jonathan Coppess, Ag Law & Policy Specialist - University of Illinois

Time is running out for landowners and farmers to decide what to do about the new farm programs. They have until the end of February to make the first two decisions, and must make a final choice by March 31st. Todd Gleason reports on the decision aids available on the University of Illinois Farm Doc Daily website.

FarmDocDaily is hosted by the ag economists…
2:51

FarmDocDaily is hosted by the ag economist at a the U of I, including Ag Policy Specialist Jonathan Coppess. The home page includes a link to something called the Farm Bill Toolbox. There you’ll find decision tools, and a brand new link under Resources named Farm Program Decision Guide.

Coppess :18 …it is all right there.

Quote Summary - It is just a PDF file available on the website. It is something to take home with you, to go to your landlord with, to sit down with your brothers and dad over family discussions with about what your are going to do (about the farm program). It is all right there.

Right there in an easy to download, print out, and use file. It in includes the deadlines - February 27th to make the first two decisions about payment yields and base acre allocation, and March 31st for the final program choice. All of which must be recorded at the local F-S-A office, the Farm Service Agency. The first two decisions, the ones due Feb 27th, should be pretty easy for row crop farmers. Take the highest yields and use the base acre allocation with the most corn acres.

Coppess :25 …if landowners aren’t getting in there soon.

Quote Summary - There is no reason to delay those decisions because the program choice follows on March 31st. It is the one where farmers will want to know a little more about the 2014 county yields. Still, the payment yields and base acre decisions should be made now, otherwise, there will be some long lines at the FSA office if landowners don’t get to the office soon.

The county yields, as released by USDA NASS this month, will help determine how much the ARC County payment will be for last fall’s crop. Once those are released, it will be easier to compare ARC County to the other two farm programs, ARC Individual and PLC.

Coppess :47 …in order to trigger a payment.

Quote Summary - The county yields will determine the ARC County payment. The final number won’t be calculated until the Market Year Average Price is released next fall. Still, it will be the indicator used to calculate and trigger the 2014 ARC County payments.

Knowing the approximate 2014 ARC County payment should help farmers make a final farm program choice. It is important to remember the choice is a five year decision not a one year commitment. The online Farm Bill ToolBox walks producers through seven steps in hopes they’ll make an informed choice.

Using the APAS Sample Farm

Using the APAS Sample Farm
Jonathan Coppess, Ag Policy Specialist - University of Illinois

Farmers and landowners wanting to learn more about the new farm programs and the sign up process can visit the Farm Bill Toolbox online. It was developed by the ag economists at the University of Illinois and Ohio State. Just search Google for Farm Bill Toolbox and you’ll find a seven step decision making process. There is also a link from the Farm Bill Toolbox to USDA’s APAS (ay-pass) website.

APAS stands for Agricultural Policy Analysis System. Jonathan Coppess from the University of Illinois says the two systems are related to each other.

Quote Summary - The way we look at it is that the APAS site gives you the chance to calculate expected payments and the Farm Bill Toolbox is the education outreach and analysis. So, you may use the two in an interrelated way. In fact we often make presentations using both, jumping back and forth from the APAS Tools to the Decision Steps.

The seven Decision Steps in the Farm Bill Toolbox guide farmers and landowners through the sign up process. The APAS Tool allows them to put their own farm numbers into the programs to see how different scenarios would work over the project five year life of the new farm safety net. Those wanting a quick view can simply use a sample farm from their own county - no matter where they live in the nation.

Quote Summary - The sample farmers are very usually friendly way to get an idea what program payments might be expected in your county. You simply choose your state and county, and a projected price series - one from USDA, one from the Congressional Budget Office, or the or the FAPRI numbers - and APAS simulates a farm sized at about $500,000 in gross revenue. The models use historical values from the county and estimates payments for a farm of that size.

The APAS sample farm is a quick way to benchmark, says Coppess, the new farm programs and how they might perform in a given county under varying price scenarios and program choices. APAS estimates farm payments based on crop, price, and program choice.

Those wanting to use the APAS Tools and the Farm Bill Toolbox can find each online.

Signing Up for the Farm Programs

The time to sign up for the farm programs has arrived. Decisions will need to be made in February and January. Read on for a quick lesson in the process, and then please visit the Farm Bill Toolbox website created by the ag economists at the University of Illinois. Landowners and farmers should find the seven step decision process in the toolbox very valuable as an aid to making the new farm program choices.

The deadline for making two of the three farm program choices is the end of February. University of Illinois Ag Economists Gary Schnitkey, Jonathan Coppess, & Nick Paulson along with The Ohio State’s Carl Zulauf penned an article about the acreage allocation and yield update decisions. It follows;

Base Acre and Yield Updating Decisions: Push to the Finish
The deadline for completing base acre and yield updating decisions is February 27th (see steps 2 and 3 of “7 Steps” on Farm Bill Toolbox). Choosing between alternatives for each of these decisions is relatively straight forward:

1) For yield updating, select the highest yield for each program crop.

2) For base acre reallocation, choose the allocation that maximizes acres in program crops with the highest payments, given that the desire is to maximize program payments.

While the decisions usually are straightforward, collecting the information and completing the process will take some time. For this reason, beginning the process now seems prudent.

Landowners Officially Make the Decisions
Decisions will be made for each Farm Service Agency (FSA) farm. For each farm, there will be a landowner who owns the farm. Under rental arrangement, there also will be a producer who farms the land.

Landowners are responsible for making the base acre reallocation and yield updating decisions. While the landowner officially makes the decisions, in many rental situations producers have the proper power of attorneys to complete paperwork for these decisions. FSA has a record of whether proper power of attorneys exists for each farm. If an appropriate power of attorney does not exist and the landowner wishes the producer to complete the process, a power of attorney will need to be signed for farmers or farm managers to complete the decisions. If a power of attorney does not exist, the landowner will need to complete the process for base acre and yield updating decisions.

Collect Yield Data
If program yields are to be updated, yields are required for each year the crop was planted from 2008 through 2012. Documentation is not required at signup. However, documentation will be required if the FSA farm is audited during the life of the Farm Bill. The method of documentation will need to be indicated at signup. In many cases, crop insurance records will be used to provide documentation. These records are the actual yearly yields used to calculate Actual Production History (APH) yields. An explanation of using crop insurance records for documentation is available here (farmdocdaily December 23, 2014).

It will not be uncommon that documentation for a yield will not exist for a year. For example, a producer may have only farmed the land in 2010 through 2012 and cannot obtain documentation for 2008 and 2009.

If a yield is provided without documentation under an audit, farm program payments may have to be repaid and a fine could result. When yield documentation does not exist, a plug yield will need to be used. The plug yield equals 75% of the county average. When documentation cannot be provided, the plug yield should be used for 2008 and 2009

Plug yields for each county and crop are publicly available. FSA has this information. They can be obtained from the Payment Yield Update tool on the APAS website. The plug yields also are contained in the Base Acre and Yield Updating tool, a Microsoft FAST spreadsheet available for download at the FAST website.

Yields can be reported to FSA using CCC–859. This form is available here.

Make an Appointment with FSA
An appointment should be made immediately with FSA. If possible, yields for updating should be completed before this meeting. Bringing completed CCC–859 forms will facility the signup process.

Yield Updating Decision
Two alternatives for the program yield will exist for each program crop (see farmdocdaily April 3, 2014 for more detail):

  • The current program yield. These yields were reported for each FSA farm in a letter received from FSA in August 2014.
  • The updated yield equal to 90% of the average of yields from 2008 through 2012. If a year’s actual yield is below the plug yield, the plug yield will be used instead of the actual yield. If an actual yield does not exist for a year in which the crop was planted, the plug yield will be used in the update yield calculation.

Choose the highest yield. The decision can differ by crop for an FSA farm.

Base Acre Reallocation Decision
There are total base acres on each FSA farm. Landowner will be given two alternatives for dividing those total base acres into acres for each program crop (see farmdocdaily March 6, 2014 for more detail):

  • Current allocation of base acres on the farm. These acres were sent to landowners and producers in a letter received in August 2014.
  • Reallocated base acres. Total base acres are reallocated based on plantings from 2009 through 2012. Actual plantings were described in a letter received in August 2014. Total base acres under reallocation will equal base acres if current base acres are retained.

This decision is important as Price Loss Coverage (PLC) and Agricultural Risk Coverage at the county level (ARC-CO) will make payments in 2014 through 2018 on base acres. Planted acres in those years will not influence payments.

Many individuals will wish to make the allocation that maximizes commodity program payments, suggesting that the allocation be selected that places most acres in the crops with the highest expected payments. Estimating expected payments by crop requires forecast of prices and yields in 2014 through 2018. Obviously, forecasts can be wrong and crop rankings can vary from forecast rankings. With the knowledge of potential differences, estimated expected payments per program crop by county are available in the sample farms section of APAS. These same estimates also are available in the Base Acre and Yield Updating tool (available at the FAST website).

Users can see expected payment per program crop under different price forecasts for individual counties. In most counties, however, the following ranking exists:

  • Corn will have higher expected payment
  • Wheat will have lower expected payments than corn
  • Soybean will have lower expected payments than corn and wheat.

Corn and soybeans are only program crop: Given the above program crop ranking, choosing the acre alternative with the most corn acres likely will maximize program payments.

As an example take a farm whose current allocation is 60 acres of corn and 40 acres of soybeans. The reallocation alternative based on 2009 through 2012 plantings is 75 acres of corn and 25 acres of soybeans. Note that both alternatives total 100 total base acres. The above ranking suggests that the reallocated alternative (75 acres of corn and 25 acres of soybeans) will have the highest expected payments.

Corn, soybeans, and wheat are the program crops: When these three program crops exist, the reallocation with the lowest acres in soybeans while maximizing corn acres usually will result in the highest expected payments. Use of the Base Acre and Yield Updating Tool is advisable in these cases.

Summary
In many cases, making choices for base acre reallocation and yield updating will be relatively straightforward. Collecting yields, getting the proper power of attorneys, and signing proper election forms will take time. Beginning the process now is important. The process needs to be completed by February 27, 2015.

USDA says ARC/PLC Sign Up Winter 2015

Friday the United States Department of Agriculture Farm Service Agency made a series of announcements related to the new farm programs' signup period. Farmers will make final irrevocable decisions between the ARC & PLC programs sometime after January 1, 2015.

timeline posted to USDA FSA website August 1, 2014
Letters are in the mail this month notifying farm operators of current base acres and yields, along with 2009-2012 planting histories. The letter asks these numbers be confirmed or updated as the first part of the sign up process. 

Online tools are under development at the University of Illinois to aid producers throughout the nation. Those tools may be ready by the official end of summer (September 22, 2014), but have not yet been released.

The following note was posted the USDA FSA website August 1, 2014;

WASHINGTON, Aug. 1, 2014 — U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) Administrator Juan M. Garcia announced today that farmers should start receiving notices updating them on their current base acres, yields and 2009-2012 planting history. The written updates are an important part of preparing agricultural producers for the new safety net programs established by the 2014 Farm Bill.

“We’re sending these reports to make sure that farmers and ranchers have key information as they make critical decisions about programs that impact their livelihood,” said Garcia. “It’s important that producers take a few minutes to cross check the information they receive with their own farm records. If the information is correct, no further action is needed at this time. But if our letter is incomplete or incorrect, producers need to contact their local FSA county office as soon as possible.”

Verifying the accuracy of data on a farm’s acreage history is an important step for producers enrolling in the upcoming Agriculture Risk Coverage (ARC) program and the Price Loss Coverage (PLC) program. Later this summer, farmers and ranchers will have an opportunity to update their crop yield information and reallocate base acres.

“We’re working hard to prepare and educate farmers on the new programs created by the 2014 Farm Bill,” added Garcia. “I encourage producers to bring their USDA notice to any scheduled appointments with the local FSA county office. This will help ensure they have the information they need with them to discuss the available program options.”

By mid-winter all producers on a farm will be required to make a one-time, unanimous and irrevocable election between price protection and county revenue protection or individual revenue protection for 2014-2018 crop years. Producers can expect to sign contracts for ARC or PLC for the 2014 and 2015 crop years in early 2015.

Covered commodities include barley, canola, large and small chickpeas, corn, crambe, flaxseed, grain sorghum, lentils, mustard seed, oats, peanuts, dry peas, rapeseed, long grain rice, medium grain rice (includes short grain rice and temperate japonica rice), safflower seed, sesame, soybeans, sunflower seed, and wheat. Upland cotton is no longer a covered commodity.