USDA's Farm Service Agency has announced there will be an important letter coming in the mail soon. It's going to all farmland owners as well as many operators throughout the U.S., arriving in mailboxes in August. The letter will contain a Summary Acreage History Report of base acres for each farm, information FSA has on file. You should read the letter to see if your FSA base acreage numbers need updating.
"When that letter arrives in your mailbox, keep it," says Steve Johnson, Iowa State University Extension farm management specialist. "Do not destroy the letter." He advises you read it right away, looking for any errors, especially for changes due to a parcel of land that was split off the farm or a change in entity. Put the letter and the report in a file folder and mark the folder "New Farm Program" or "2014-18 ARC/PLC." ARC is the Agriculture Risk Coverage program, PLC is the Price Loss Coverage program.
This FSA letter is first step in 3-part process
This letter is the start of a six to eight month process regarding the update, election and sign-up for USDA's new farm program, as a result of the 2014 Farm Bill. Here's how Johnson explains it:
* Update: The first step is an opportunity for you to update your farm's historic base acreage and/or yield history which will take place later this summer or fall. The letter will explain this. The farmland owner and the farm operator can retain historic base acres or reallocate base acres, and/or update CC yields, by FSA farm number.
* Election: Second step in the process is you'll have to decide whether you want to enroll in the ARC or PLC program. Once base acres and yield history are determined for your farm then your election of the ARC or PLC program is established for the five-year period 2014-2018. That's right. This is a five-year decision. FSA will probably ask you to make this election later this fall or perhaps early in 2015. FSA hasn't announced exact dates yet.
* Enrollment: Once you complete the election of either ARC or PLC, then the enrollment by "the entity at risk" occurs annually. The sign-up for both the 2014 and 2015 crops will run concurrently and will likely take place in early 2015.
What information will be in FSA's August letter?
What specifically will be in the letter from FSA this August? The letter will contain a history of base acres on a farm, says Johnson. Most farms have an FSA farm number, that's how FSA identifies them. You want to keep, by farm number, the 2013 base acre history. The letter will also have actual planted acres on each farm, for a series of years. FSA is using 2009, 2010, 2011 and 2012 as the four years you can reallocate base acres. FSA is using 2008, 2009, 2010, 2011 and 2012 for the years you can update yields.
The letter will also contain the CC yield history of the farm. That's the counter-cyclical yield based on previous farm bill enrollment. Landowners and operators on the farm will be able to update their yield with FSA.
"We don't know all the final details of how FSA will carry out yield updates, but you need to be prepared this fall to retain or reallocate base acres and/or update yields. Keep in mind you're not creating any new base acres," says Johnson. "Also, be prepared to update FSA's CC farm yields using the five years from 2008 to 2012 to create what we call a new PLC yield, using 90% of the simple average of production for those years."
Where can you get more information on this?
ISU Extension is conducting farmland leasing meetings, with over 50 meetings taking place throughout Iowa in late July and running well into August.
If you want to learn more about farmland leasing, farmland ownership, cash rent trends, land value trends, especially with the new ARC/PLC program, contact your local county Extension office and plan to attend one of these meetings.
There's also a webinar archived you can listen to and view on the Internet. It was conducted by ISU Extension economist Chad Hart and Iowa FSA state program specialist Kevin McClure on July 21. It's available here.
Other information regarding August FSA letter
John Whitaker, state director for FSA in Iowa, says the letter will go primarily to farm owners, and some farm operators who rent from owners. "This letter is a notice of commodity acreage history in the USDA farm program for each farm," he says. "It's the number of acres and crops you planted on that tract of land the last five years. The history may have holes in it if a tract has changed hands, if there's been a sale or if you divided or combined tracts. So the base acre numbers in the letter you receive may need to be updated with FSA."
The letter isn't coming from your county FSA office in Iowa. It'll come from FSA's Kansas City regional office. Once you receive the letter and read it, if you find you're your base acres and yield need to be updated, or if you find holes in the information, Whitaker says you'll need to talk to your county FSA office. Likewise if there have been changes in ownership or changes in the way tracts of land are put together, talk to FSA. This letter is basically a notice of the base acres and what crops you've planted the last five years.
Is this something USDA does regularly?
"No," says Whitaker. "This letter is uncommon; it's an update on base acres driven by the new farm bill. It's in preparation for implementing the new farm bill."
While you need to hold onto this letter, you may not want to do anything with it for a while. "You need to hang onto this letter but you may not have to do anything with it until later," notes Whitaker. "Read it when you receive it. See if the base acre numbers USDA has for your farm agrees with what you have in your records."
Letter may catch some landlords by surprise
This letter may look intimidating to a landlord who didn't participate in past FSA farm program decisions. For owners who rent out land and aren't used to getting information from FSA or USDA, the letter could catch them by surprise. "They'll need to work with their farm operator in that situation," says Whitaker.
When you go into the county FSA office, take the letter with you. The FSA staff is supposed to be able to see the contents of the letter on a computer screen. That's the plan. But bring the letter with you anyway. "Whenever you get a letter from FSA it never hurts to take it with you when visiting your local FSA office," he notes.
"Open the letter when it arrives in your mailbox and read it," sums up Whitaker. "That's the key. Read it thoroughly and also watch for educational opportunities to learn more about the new USDA farm program. This is a complex farm bill. You need to gather information, ask questions and understand what your options are to make the best decisions for your farming operation."