Farm Bill contains different options and new programs for producersWritten by Natasha Wheeler
“There are a lot of moving parts in the new Farm Bill,” says John Hewlett, UW Extension ranch and farm management specialist.
He explains that the bill passed in 2014 provides producers with options for planning risk management strategically for their individual operations.
“Producers have to choose, and I’m afraid if they don’t choose, they’re out,” he says of the available programs outlined in the bill.
Yields and base acres
Operators should have their yields updated and base acres reallocated by Feb. 27, and March 31 is the deadline for choosing a Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC) program.
“Though producers may have elected the program they want to participate in, they also must enroll,” Hewlett warns.
After April, there will be paperwork that producers have to sign to be eligible for their chosen program.
“There are quite a few things that haven’t changed or have not changed dramatically,” states Nicole Ballenger, agriculture and economics professor at UW.
Marketing assistance loans and loan deficiency payments, the sugar program, Conservation Reserve Program (CRP), Noninsured Crop Disaster Assistance Program (NAP) and forage and livestock disaster programs have carried over from the previous bill.
“The last farm bill had a program called ACRE, or Average Crop Revenue Program, which was an option for producers to use for revenue protection,” she says. “That program is gone and has been replaced by a package of programs called ARC and PLC.”
She explains that producers should have received a letter from the Farm Service Agency (FSA), outlining their base acres and current program yields, also known as counter-cyclical yields, which will play a part in the new programs.
“It is important for producers to go to the FSA office to talk about updating counter-cyclical yields,” she says.
Program payments, she explains, may be dependent on that value.
Ballenger says the second thing to consider is a reallocation of base acreage.
“As a one-time decision for the entire life of this farm bill, producers have the opportunity to retain the base acres they already have or to reallocate their current base to cover commodities that were planted in crop years 2009 through 2012,” she states.
Operators must also choose which ARC/PLC program they wish to enroll in, says Ballenger.
“Producers won’t have another opportunity to choose which program they’d like to utilize for the whole life of this farm bill. It is a one-time deal,” she says.
Inside crop protection
ARC/PLC programs provide revenue or price protection on 21 covered commodities, and there are three options to choose from – PLC, ARC – County (ARC-CO) and ARC – Individual (ARC-IC).
“PLC provides price protection, similar to counter-cyclical payment programs that producers might be familiar with from the last farm bill,” she explains.
This program may be selected for any commodity in a farm’s base.
“If a producer does not choose a program, it will be assumed that they have elected PLC,” states Ballenger.
She warns that an enrollment process is still necessary, and no choice may result in sacrificing potential payments for 2014.
“ARC programs provide revenue protection. They provide price protection, as well as a safety-net with respect to producer yields,” Ballenger continues.
ARC-CO provides revenue protection on a commodity-to-commodity basis. ARC-IC provides protection at the farm-level.
“When a producer picks ARC-IC, they automatically pick that program for every commodity planted on that farm,” she explains.
Commodities covered by ARC-IC must be planted on the farm, whereas commodities covered by the other two programs only have to be in base acres.
“PLC is based on what’s happening with prices in the market, and ARC-CO is based on what’s happening with revenues at the county level,” says Ballenger.
She notes that producers must enroll annually for their elected programs and contracts must be signed for 2014 and 2015 crop year.
Other programs in the new farm bill include the NAP.
“NAP is something that a lot of folks in Wyoming have used historically,” says Hewlett.
This level of protection is called catastrophic coverage, which is triggered by yield loss 50 percent or greater.
“NAP is being updated now to allow for something called buy-up coverage,” he states.
Buy-up coverage allows for yield protection up to 65 percent, as well as up to 100 percent of price level protection established by the FSA for a particular commodity.
“NAP protects against natural disaster events such as hail, drought and excessive moisture. With buy-up, the producer must share in the risk of producing that crop,” Hewlett explains.
Premiums and payments will be calculated based on acres, shares, yields and coverage levels.
“If producers qualify for beginning farmer, limited resource operator, socially disadvantaged operator or veteran operator status, there are some special caveats for them in all of these programs,” Hewlett says.
He also notes that producers are not eligible to receive payments under NAP and the Livestock Forage Program (LFP).
“Producers would have to choose which of these programs they want to get payment for if they happen to be covered under both programs,” he says.
A cap is also included in the new farm bill. Whether payments come from ARC/PLC, NAP, LFP, Livestock Indemnity Program (LIP) or Emergency Livestock Assistance Program (ELAP), payments from farm bill programs cannot exceed $125,000.
“If producers elect to purchase and enroll base acres in PLC coverage, they also have the option of obtaining Supplemental Coverage Option (SCO) for those acres,” says Hewlett.
SCO is available on a select number of covered commodities with the purchase of crop insurance.
“SCO takes on the coverage of yield-based protection or revenue protection, depending on which insurance policy a producer has purchased, and it comes with a separate premium,” Hewlett explains.
He also mentions whole-farm revenue insurance, a new option in the latest farm bill.
“SCO insures a base-level revenue for a farm, based on its past revenue history,” he says.
Hewlett notes that disaster assistance programs have changed, as well.
“The Supplemental Revenue Assistance Program (SURE) that was available for livestock type operations has gone away,” he states.
LFP, LIP and ELAP have been re-funded permanently.
“If producers have not filed for losses under any three of those programs, it is still possible to do that if they experienced a loss. The deadline for filing is the end of January,” Hewlett says.
Hewlett and Ballenger encourage producers to review their options for all of the new farm bill programs and to speak with FSA.
“There are different choices available to producers,” Hewlett says.
He adds that what works for one operation may not necessarily be the correct choice for their neighbors. Hewlett encourages individuals to assess what makes the most sense for them.
To apply for programs within the 2014 Farm Bill, producers must pay special attention to upcoming deadlines, which are listed below.
Feb. 27 – Deadline to retain acres or reallocate base acres
Feb. 27 – Deadline to retain or update program payment yield for each commodity covered
March 31 – Deadline to select Price Loss Coverage (PLC) or Agriculture Risk Coverage – County program or Agriculture Risk Coverage – Individual for the entire farm
Producers must annually enroll in the elected programs. Contracts must be signed for 2014 and 2015 crop years.
Producers enrolled in PLC who also participate in federal crop insurance programs may purchase supplemental coverage.