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Land owners will help make farm bill choices

Land owners who do not farm their land are not typically involved in farm program decisions at FSA offices, as those decisions are usually made by farm operators. However, in the coming months, farm operators and land owners will have several one-time choices to make regarding their farm program participation for the 2014-2018 crop years, as part of the commodity title of the new farm bill. Most crop commodity programs will be in effect for the 2014 crop year, even though the sign-up process has not yet begun. Since the commodity farm program choices are for five years (2014-2018), land owner approval and signatures will be required on all cash and share rented farm land.

Many land owners rent their land out to farm operators, primarily in annual cash rental agreements that are renegotiated each year. Approximately two-thirds of the crop land in southern Minnesota is under some type of cash rental agreement. There is a small amount of land under share rental agreements. Once a land owner has made their choices for base acre reallocation, updating program yields, and the farm program choice, those decisions will continue on through 2018, regardless if the land is rented to another farm operator in future years. The farm program decisions will also be in place through 2018, if the land is sold in the next few years, which makes these decisions extremely important to land owners.

Farm program sign-up will take place at local Farm Service Agency (FSA) offices, and will likely be separated into two parts. The first sign-up period will likely start in early fall, and will be for the purpose of reallocating crop base acres, and potentially updating farm program payment yields. The second sign-up period at local FSA offices will be to make the actual farm program choice on each FSA farm unit, for each eligible commodity. This sign-up period will likely start in late Fall of 2014, and continue into early 2015. In the coming months, farm operators and land owners will need to research and evaluate the various farm program options and alternatives that will be available.

The basic commodity farm programs in the new Farm Bill will be implemented by USDA for the 2014 crop year. Producers and land owners of signing up for either the Price Loss Coverage (PLC) program, or the Ag Risk Coverage County (ARC-CO) program for each eligible crop on a FSA farm unit. Another option is the ARC program using individual farm data (ARC-IN), which will require having all crops on the farm unit in the ARC-IN program. Any potential PLC or ARC payments for the 2014 crop year will not occur until October, 2015, which will be paid on the updated crop base acres, Any potential PLC payments will be paid on updated FSA payment yields, while ARC-CO and ARC-IN payments are based benchmark crop revenues for 2014.

Landlords on cash rental farms will be a big part of the decision making process, and will be required to sign all FSA farm program documents. A “no decision” on reallocating crop base acres and FSA payment yields, will result in continuation of the existing base acres and payment yields. A “no decision” on the farm program choice on a FSA farm unit will result in that farm unit being in the PLC program for 2015-2018, with no farm program coverage for 2014. This error could result in the farm operator missing an ARC-CO payment of as much as $75-$85 per corn base acre in Minnesota for the 2014 crop year. Not making the correct base acre, payment yield, or farm program choice could also result in loss of more potential ARC or PLC payments in future years.

Farm operators and land owners should have received information from the FSA regarding base acre reallocation and updating PLC payment yields. Very soon they will also be receiving information on the PLC and ARC farm program choices. Farm operators and land owners need to take the time to evaluate the various farm program options and alternatives that are available. These decisions could have a major effect on the future profit margins for farm operators, as well as future land rental value for crop land.

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