USDA Releases Details On New Risk Management Programs

USDA Releases Details On New Risk Management Programs

Farm Service Agency finalizes ARC and PLC safety net options provided by 2014 farm bill.

U.S. Secretary of Agriculture Tom Vilsack on Sept. 25 introduced new details and planning options for farmers seeking safety net coverage as authorized by the 2014 Farm Bill. Producers may navigate to the USDA Farm Service Agency's new website to review online tools designed in partnership with University of Missouri, University of Illinois and Texas A&M economists. These tools can help farmers and farmland owners decide whether to use the Agricultural Risk Coverage (ARC) or Price Loss Coverage (PLC) options.

ARC OR PLC?: USDA chief Tom Vilsack announced Sept. 25 a website to help farmers decide which of the government's new farm programs, Agricultural Risk Coverage or Price Loss Coverage, will work best for their farming operations.

If a producer makes no election, the PLC option will be automatically selected for that farm. Vilsack said during a phone call press conference that a cutoff date for farmers to make the ARC or PLC election decision has not been determined yet, and sometime later this coming winter or early spring 2015 is the target.

Updating FSA yields, reallocating base acres involves landowner
The important step right now is for farmers and landowners to decide whether to update their yield history and reallocate base acres at the local FSA office. "This decision will go a long way in determining the coverage you can get from the new programs," says John Whitaker, state executive director for FSA in Iowa. "You can go to your FSA office starting Monday Sept. 29 to find out more about updating yields and reallocating base acres, and get your questions answered."

The owner of the farm will make these update decisions by signing FSA forms, says Whitaker. The new farm programs in the 2014 farm bill involve the landowners much more directly than USDA farm programs did in the past. It's not just the farm operator, in the case of rented land, who is involved in making farm program decisions.

It's a one-time chance for farmers to make a 5-year decision
Owners of farms have a one-time opportunity to either maintain the farm's 2013 base acres of covered commodities through the 5-year life of the farm bill (2014 through 2018), or they can reallocate base acres among the covered commodities planted on the farm at any time during the 2009-2012 crop years. These two decisions—whether to reallocate base acres and whether to update your FSA yield history for each farm—will be determined first. Then you can make the PLC vs. ARC decision later on.

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Farm operators and farm owners should have already received 2013 base acre and planting history information in the mail, to help make the reallocation decision. If you didn't receive that letter from FSA in August, or if you can't find it, contact your FSA office now for another copy.

Each producer has to make the choice that's right for them
The FSA base acres on farms are the foundation for both the PLC and ARC programs. Any payments from either county-level ARC or PLC will be made on 85% of the base acres you have for a commodity crop. In the Corn Belt, on farms where more corn has been planted in recent years, farmers should consider reallocating their base acres to reflect that. Higher payments are more likely from having a bigger corn base and a higher yield history.

"There's no one answer here," Vilsack says of the 2014 Farm Bill options. "This is very much an individual farmer-by-farmer, farm-by-farm decision." He emphasizes that the mix-and-match nature of the new USDA farm programs make for difficult decisions which will need to be considered by all parties involved in a farming operation—by both the landlord and the farm operator.

FSA offices have this new information beginning Sept. 29
Beginning Sept. 29 farm owners may begin visiting their local FSA offices if they want to update their yield history and/or reallocate base acres. That's the first step to take, before choosing which new USDA farm program (ARC or PLC) best serves their risk management needs.

The letters sent by FSA earlier this summer enable farm owners and operators to analyze their crop planting history in order to decide whether to keep each farm's base acres or reallocate the base according to recent plantings. The letters say you have 60 days from the date you received the letter to notify FSA whether the information in the letter is incorrect, regarding base acreage and yield history on your farm.

Make your FSA base acre and historical yield updates now
Farmers may also begin making their elections for either ARC or PLC starting Sept. 29, because FSA offices now have the final details about these two new farm programs. However, Vilsack advises waiting until later to make your ARC vs. PLC decision.

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"There are a multitude of variations that have to be considered for each farm, by each farmer, regarding the choice between ARC and PLC. And you have to be comfortable with what you think the future might be when you are making this decision," he says. "You'll see when you work through and compare these programs—as you use the online tool to do it— in some cases there can be tens of thousands of dollars difference, depending upon the circumstance. Remember, this is a 5-year decision you are going to make, for the life of the new farm bill."

For more information visit www.fsa.usda.gov/arc-plc or your local FSA office.

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.

TAGS: USDA
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