Farm operators can position themselves to maximize their farm program participation benefits by helping their landowners update crop acreage bases and program yields.
For each farm number, your landowners can choose whether to retain their existing crop acreage bases or reallocate them. Second, the landowner needs to choose whether to update to new price loss coverage (PLC) program yields or keep the old countercyclical (CC) yields.
After those steps are completed, the current producer elects whether to participate in a PLC or Agricultural Risk Coverage (ARC) program, and then enrolls in the program elected. For owned land, the operator is both owner and producer. Updating bases and yields may not pay on all farms you rent. But you won’t know unless you, or the landowner, run the numbers.
In August FSA sent all landowners and operators a Summary Acreage History Report for each farm. It lists crop acreage bases, planting history for 2008-12 and CC yields. To decide whether to update bases, enter your acreage data from the report into the FSA Base Reallocation Tool. You will find a link to that Excel spreadsheet in our Tool of the Month on Page 10.
The tool will calculate what your reallocated bases would be reflecting your 2009 through 2012 plantings.
The Summary Acreage History Report also lists program CC yields for each crop. Owners and operators can choose to use those yields going forward or update based on their 2008 through 2012 actual yield of planted acres. The calculation for updating the yield is 90% of the simple average of the farm’s 2008-12 actual yields. Farmers who have low yields — think 2012 drought — or missing yields can substitute 75% of the county average yield for the missing yields. Landowners or operators can choose to update yields regardless of whether the operator will choose to participate in PLC, ARC-County Coverage (ARC-CO) or ARC-Individual Coverage (ARC-IC).
For example, suppose your Summary Acreage History Report shows a CC yield of 142 bushels per acre. Suppose the county average yield is 168 bushels. The substitute yield would be 75% of the county yield, or 126 bushels. Suppose an owner’s actual yields were 2008, 151 bushels; 2009, 165 bushels; 2010, 155 bushels; 2011, 180 bushels; and 2012, 119 bushels. The 119-bushel yield in 2012 is less than 126, which is 75% of the county yield. The owner would use 126 in the calculation.
The updated yield would be [(151 + 165 + 155 +180 + 126)/5] × 0.90 = 139.86 bushels, says Steve Johnson, Iowa State University Extension farm management specialist. “That’s less than the 142-bushel CC yield listed on the form. So he’d use 142 bushels as the new PLC payment yield for corn on that farm, rather than update.” The link to FSA’s yield updating tool is also on Page 10.
You should have yield data on all the farms you’ve operated since 2008. The owner may also have preserved yields for all of those years. However, if a different operator farmed an owner’s land during any year from 2008 to 2012, you can ask the previous operator for yield information. If you and the owner cannot get the data, then substitute 75% of the county yield for each year of missing data.
Yields subject to spot-check
The yields that owners and operators put into the new yield updating tool are certified yields. That means participants do not need to provide yield documentation at enrollment.
However, owners must provide production evidence if spot-checked. So “guessing” at missing yields is not a good choice. Acceptable records would include:
* Risk Management Agency data on specific year yields from actual production history records
* production evidence of crops sold or placed in commercial storage
* on-farm storage records
* FSA loan records
Decision Time: Risk Management is independently produced by Farm Futures and brought to you through the support of Case IH. For more information visit caseih.com/beready.