They’re beginning to be called “magic” acres. Those are the millions of cotton base acres that will become generic base when farmers enroll in the Price Loss Coverage or Agricultural Risk Coverage programs in the new farm bill.
Farmers can use those generic acres in the calculation of base acres for crops such as corn, grain sorghum, peanuts, rice, soybeans and wheat because cotton is no longer a covered commodity when it comes to farm programs. Hence, the term “magic” acres.
The changeover from cotton base to “magic” acres is one of the major topics of discussion as the USDA’s Farm Service Agency, land grant universities and farm groups hold farm bill listening sessions, according to Larry Falconer, Extension agricultural economist with the Delta Research and Extension Center in Stoneville, Miss.
Dr. Falconer talked about some of those questions during an interview that followed his presentation at the USDA Farm Bill Implementation Workshop held by the Coahoma and Quitman County Farm Service Agency offices, Mississippi Farm Bureau and Mississippi State University Extension personnel in Clarksdale, Miss.
“There are two questions that come up quite frequently,” said Falconer. “One of them has to do with the transition of the old cotton base acres to generic base acres and how that’s going to be treated going forward.
“The other question we get is whether it’s going to be better to go through the process of updating my base acres for payment purposes going forward or would I be better off using my historic base acres.”
Decision making question
The third most often-asked question, he said, is “how am I going to make an informed decision between the two price and income support programs – the price loss coverage program and the Agricultural Risk Coverage program. Today I tried to go over a tool that has been developed along with some spread sheets that Mississippi State University Extension Service has developed.”
Dr. Falconer said price projections that farmers use in their analysis will be crucial to the levels of payments that are generated under either one of the Agriculture Act of 2014’s Title I programs – price loss coverage or Agricultural Risk Coverage. (The TAMU/Missouri decision aid contains price forecasts provided by Missouri’s Food and Agricultural Policy Research Institute,)
“If the projected prices are lower, you would expect that participation in some of those programs would be more important to provide downside income protection for producers,” he said. “If you miss on the low side, and prices turn out a little better than what we anticipate in this particular situation that shouldn’t be too bad.
“If prices actually fall away and are a little worse, then you need that protection that the farm bill has built into price loss coverage and agricultural risk coverage programs.”
Farmers have a number of options with the new farm bill, but if they don’t enroll in either of the two primary safety net programs – PLC or ARC – they will automatically be signed up for the price loss coverage option. That makes it important for growers to consider their choices carefully.
Soybean, corn decision
“I would agree with that, particularly when you look at the decisions you make relative to soybeans and corn,” says Falconer. “The two programs that you have a choice between can make quite a bit of difference. Generally speaking, for rice and peanuts it appears that the price loss coverage program would be the preferred route.
“Between corn and soybeans, it can vary from farm to farm and county to county.”
The variation between farms, and the fact it’s almost impossible to make broad generalizations about program participation will make the decision aid tool developed by the Agricultural and Food Policy Center at Texas A&M University and FAPRI at the University of Missouri even more important.
Base reallocation could also be a critical issue in such areas as Coahoma and Quitman counties that historically have been predominantly cotton-growing areas. Producers now have to determine how to best allocate those former cotton acres to maximize their price protection on covered crops.
Cotton acres will continue to be eligible for the Commodity Credit Corp. loan and for loan deficiency payments and for the Stacked Income Protection Plan or STAX insurance coverage on top of convention crop insurance coverages. (The changes are partly the result of the WTO case brought by Brazil against the traditional U.S. cotton program and partly the cotton industry’s decision to seek a shallow loss coverage program.)
The generic base acres or “magic” acres that were formerly cotton base can now be reallocated to provide broader coverage under the PLC or ARC programs for commodities that remain covered by the 2014 farm bill.
STAX/farm bill sessions
The National Cotton Council is holding a series of STAX/farm bill workshops at a number of locations beginning Monday (Nov. 10). For more information on those, visit http://southwestfarmpress.com/government/ncc-hold-staxfarm-bill-workshops-cotton-belt.
Farm Service Agency spokespersons at the Clarksdale meeting cautioned farmers to investigate their yield, base and farm program options before they arrive at their county FSA office to sign up for the new farm bill.
“In the past, we could tell you what we thought might be the better course of action,” said Pamela Rhoades, county executive director for Coahoma and Quitman Counties for FSA. “We can no longer do that, and, to be honest, it’s not in your best interest for us to do that for you under this new program. These are decisions only you can make.”
For more information on the decision aid software developed by Texas A&M and the University of Missouri, visit http://Decisionaid.afpc.tamu.edu and for information developed by Mississippi State University, go to http://Blogs.msucares.com/agecon/