Farm operators and owners have tough decisions to make over the next few months as a result of the 2014 Farm Bill.
Starting now and rolling into the official enrollment period in April 2015, landowners have to make a one-time decision to select the type of crop-safety net payment program they want in place for the next four years, officials said at a Farm Bill producer meeting earlier this month in Cortez.
Direct and countercyclical payment programs that farmers have used for the last six years – since the 2008 Farm Bill – now are gone. Three new programs are in their place: county Agriculture Risk Coverage, County ARC; individual Agricultural Risk Coverage, Individual ARC; and Price Loss Coverage, PLC.
These new programs are designed to supplement crop insurance by providing support in periods of multi-year price declines by helping producers cover the crop insurance policy’s deductible. Experts say these two farm programs are projected to spend substantially less than the programs they replaced. The savings come in large part to the structure.
Unlike payments under the previous farm bill, payments for the new programs no longer are guaranteed, said Paul White, executive director of the Montezuma County Farm Service Agency. Crop prices must go below a benchmark in order for payments to kick in.
“It’s all going to come down to how bad the market is. ... This is where it becomes a safety net. There could be no payments issued for the life of this Farm Bill,” White said. “The price has to fall below that before a payment can be made.”
Wheat, one of the most commonly grown crops in Montezuma County, would need to fall below $5.50 per bushel in order for a PLC policy holder to see a payment.
Payments for the ARC and PLC programs, if any, are issued after the end of the respective crop year but not before Oct. 1.
Farm owners also have until Feb. 27 to either retain their farm’s 2013 base acres or reallocate crop base acreage among covered commodities planted between 2009 and 2012. The new farm bill also gives farmers a one-time opportunity to update their program payment yields or retain the farm’s 2013 counter-cyclical yields.
Yields can be updated using 90 percent of the farm’s 2008-12 average yield per planted acre. Program payment yields are used to determine payments only for the Price Loss Coverage plan, but owners can update their yields regardless of which program they opt to participate in.
Setting the base acreage is done first, White said, since the County ARC and PLC commodity programs both are tied to acreage levels on file with the FSA rather than what the farm currently is producing.
The Individual ARC program, however, is tied to both historical base acreage and current crops planted.
An example he gave was a farm with 500 base acres of wheat that switched to planting half of that acreage to corn and the other half to soybeans in the years 2009-12. The farm now has the option to maintain the 500 base acres of wheat or reallocate the base acres to 250 acres of corn and 250 of soybeans. What the farmer can’t do is add those corn and soybean acreages to his base of 500 acres.
To help farmers decide on what they want to do, the FSA mailed information to owners in July that details what base acres and covered commodities planted during the 2009-12 crop years it has on file.
Replacement letters can be obtained at the local FSA office, but he emphasized that if a farmer hasn’t been considering his options, the February deadline rapidly is approaching.
White stressed that an owner who opts to reallocate, the total number of base acres cannot increase.
Multiple owners of a farm need a unanimous decision on base reallocation or acreage retention, and farm operators can’t make a decision on base allocation without a power of attorney.
Acknowledging the furrowed brows and blank stares in the crowd, White admitted the rules were complex, confusing and subject to change at anytime. Additionally, the FSA can’t give specific guidance to farmers on what their best coverage options are.
“Clear as mud, right?” he said.
