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Farm program deadlines approaching

The deadline to finalize decisions on base acre reallocation and updating payment yields at local Farm Service Agency (FSA) offices is Feb 27. The deadline for producers to complete the farm program choice on each farm unit, and potentially on each eligible crop, is March 31. There have been hundreds of farm program information meetings held in the Upper Midwest in recent months, as well as print and online articles, spreadsheets, etc., on enrollment in the new farm program. However, even with all that information available to farm operators and landowners, there is still some confusion and misinformation regarding the various farm program decisions.

All decisions at local FSA offices on updating FSA program yields and reallocating crop base acres for each FSA farm unit require at least one landowner signature. If a producer is an owner/operator, they could make the decision on that FSA farm unit, even if there are multiple landowners. However, it is advisable to communicate with all landowners on a FSA farm unit regarding the base acre and payment yield decision that is chosen, since this decision will be in place for five years (2014-2018).

Producers will make the final 5-year farm program choice on each FSA farm unit for the 2014-2018 crop years. The choices are between the Price Loss Coverage (PLC), Agricultural Risk Coverage-County (ARC-CO), or Agricultural Risk Coverage-Individual Coverage (ARC-IC) programs. Landowners with crop-share rental agreement are considered producers by FSA, and must agree with the farm program choice on a FSA farm unit. Landlords with cash rental agreements will not be required to sign-off on the farm program decision. In cases, where there is a switch of producers from 2014 to 2015, the producer listed at the FSA office on the farm unit at the time of farm program sign-up would make the program choice.

If no choice is made for updating FSA payment yields or base acre reallocation, the existing crop base acres and CC payment yields on a FSA farm unit, as of 2013, will remain in place for 2014-2018. If no farm program choice is made by the sign-up deadline, the farm unit will be enrolled in the PLC program for 2015-2018, and there will be no farm program payments for the 2014 crop year. Depending on the crop, farm location, and farm program choice, this could be a very costly mistake.

FSA payment yields for all eligible crops will be used for payment calculations for the new PLC program, but not for the ARC-CO or ARC-IC program options. Even if plans are to choose the ARC-CO or ARC-IC program option, it may still be a wise choice to update the FSA program yields for eligible program crops on FSA farm units where there is an advantage, as these updated yields may be carried forward for future farm programs beyond 2018. The opportunity to update FSA payment yields has not been made available since 2002, and if the program yields were not updated in 2002 (counter-cyclical program), the current payment yields are the direct payment yields, which date back to the early 1980s. Current FSA yields may be lower than the county plug yields in some instances.

A substitute yield, or plug yield, equal to 75% of the county average yield (2008-2012) will be used in any year (2008-2012) that the actual farm yield for a given crop falls below plug yield level, as well as in any year in which a crop was raised, but there is no yield data available. The county plug yields are available from the USDA FSA farm program website, and automatically are entered in to the official FSA payment yield update spreadsheet.

A one-page FSA form, Price Loss Coverage (PLC) Yield Worksheet (CCC-859), is used as a worksheet for potentially updating FSA payment yields. On Form CCC-859, the crop yield for each year (2008-2012) that a particular eligible crop was raised is listed, and crop insurance (RMA) data is acceptable for yield evidence. Only the years that the crop was raised on a particular farm unit are considered for the yield update. FSA offices will not be verifying the yield data on Form CCC-859; however, the yields reported on that form will be subject to FSA spot checks at a later date. Acceptable records for yield verification during spot checks will include RMA data that is used for crop insurance APH calculations, production evidence for grain sold or placed in commercial storage, on-farm grain storage records, livestock feeding records, or FSA loan records.

All farm program payments for the new PLC and ARC-CO programs will be calculated on crop base acres, rather than on year-to-year planted crop acres. The last time that crop base acres could be updated was in 2002, and it is possible that the updated crop base acres could continue beyond the current farm program. The choice is to either keep the existing crop base acres (as of 2013), or to update crop base acres to the ratio of average planted crop acres on a FSA farm unit from 2009-2012. Total reallocated crop base acres for 2014-2018 can not exceed the total crop base acres that existed in 2013 farm program. Landowners and producers should have received a listing of existing crop base acres, and the reported planted acres for 2009-2012 from the FSA in late July or early August.

In some cases, the existing crop base acres may be more desirable than the reallocated base acres, such as in cases where the existing crop base has more corn base acres than the reallocated crop base. There also could possibly be some higher value commodity crops, which have a higher likelihood of farm program payments in the next five years (2014-2018), that may be eliminated through base acre reallocation. There is no requirement to plant certain crops on base acres (2014-2018) in order to be eligible for farm program payments for the program crop with either the PLC or ARC-CO programs.

Many Midwest farm operators planted higher levels corn from 2009-2012, so there may be an opportunity to increase corn base acres on some FSA farm units, if that is desired. In most areas of the Midwest, corn base acres tend to offer higher maximum payment potential, and greater likelihood of payments in 2014, and possibly 2015, than soybeans, wheat, or other likely base acre crops. However, the program payment levels and likelihood of payments may be different in other areas of the U.S., which have lower corn yield levels, or may have other alternative program crops to consider.

The USDA Farm Service Agency (FSA) has created a website with up-to-date information and resources on base acre reallocation, updating payment yields, plug yields, ARC-CO yields, updated MYA prices, etc. Following are some good websites for the farm program information, spreadsheets, and other resources:

Kent Thiesse has written three information sheets: New Farm Program Sign-up Details, Understanding MYA Price Calculations and Q&A on the New Farm Program. To receive a free copy of these information sheets, e-mail or call (507) 726-2137. 

TAGS: Soybean Corn
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