By Steve Johnson
EDITOR'S NOTE: Steve Johnson is an Iowa State University Extension farm management specialist. Contact him at 515-957-5790 or [email protected].
A few months ago, the USDA Farm Service Agency (FSA) mailed letters to farmland owners and their producers with a summary of covered commodities. This was actually the start of a three-step process for the new commodity crop program.
Now, farmland owners by FSA farm number have a one-time opportunity to: (1) maintain the farm's 2013 base acres of covered crop commodities through 2018; or (2) reallocate base acres among those covered commodities planted on the farm during the 2009 to 2012 crop years.
In addition, the farmland owner can choose to update their old countercyclical (CC) yields. These base and planted acre numbers along with the countercyclical (CC) yield were all listed on the Summary Acreage History Report that accompanied the letter from FSA.
Landowner is involved in a cash rent situation
When updating the farm's yield, a choice needs to be made by the landowner on the farm. Should they retain the farm's CC yield or update to a new Price Loss Coverage (PLC) yield? This new yield would reflect actual production for a commodity crop grown on the farm during the years 2008 to 2012.
That simple average yield for those years is then multiplied times 90% to create the new PLC yield. This yield replaces the farm's old CC yield. A plug yield of 75% of the county yield can be used for any year the commodity crop was produced, but there was a low or missing farm yield for any of those five years. That's where you can use the plug yield.
This base acres and/or yield update can take place now through February 27, 2015. Then the second step takes place. That is, the current producer on the farm can then elect by FSA farm number between a revenue-loss program that covers a combination of price and yield losses: Agricultural Risk Coverage (ARC) or a price-loss only program known as PLC.
If ARC is elected, the producer will have to choose between a county ARC (ARC-CO) on a commodity-by-commodity basis or choose an individual farm ARC (ARC-IC) that combines all the program commodities on the farm together.
ARC/PLC program implementation timeline
Thus, there are important decisions coming up this fall and winter for both landowners as well as current producers on the farm. Here's a summary of the three-step process:
1) UPDATE: The first step is whether you want to update base acres and yields. The landowner makes that decision. The landowner has between Sept. 29, 2014 to Feb. 27, 2015 to update base acres and/or yields by FSA farm number.
The second and third steps involve the current producers on the farm. The second step is the determination of whether or not to elect ARC or PLC. ARC is a revenue-based program. PLC is a price-loss program. If you elect ARC, do you want to elect the county level or the individual farm level?
2) ELECTION: Current producer can make a five-year election by FSA farm number for ARC-County, ARC-IC, or the PLC program. This decision has to be made between November 17, 2014 to March 31, 2015.
3) ENROLLMENT: The third step is enrollment. Producers enroll the farm for the program elected. They can do this from mid-April through Summer 2015. It they enroll for 2014 and 2015 crop years concurrently.
Attend an upcoming meeting, get your questions answered
Iowa State University Extension and Outreach is partnering with the USDA Farm Service Agency to provide free informational meetings across Iowa to explain these new farm program options. These statewide meetings begin in early November. They will include a discussion of the new risk management programs ARC and PLC, as well as demonstrations of the online tools that have been created for producers to aid them in choosing which program is best for their farm.
ISU Extension farm management specialists will be on hand, prepared to discuss decisions farmers and landowners need to make in coming months regarding ARC and PLC options. Local FSA office staff members who administer the programs will be available to help explain the programs and answer questions.
More than 50 of these meetings have already been scheduled. Additional meetings will also be added to the schedule and they'll be posted on the ISU Ag Decision Maker farm bill Web page. Contact a host county Extension office to let them know you are interested in attending one of these meetings near you. Mark your calendar now and plan to attend.
For farm management information and analysis visit ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm; ISU farm management specialist Steve Johnson's site is at www.extension.iastate.edu/polk/farm-management.