Five crop years are riding on a one-time selection
There’s a lot riding on the new farm bill—almost $1 billion per page, actually. After three years of hearings, markups and floor time, the 959-page Agricultural Act of 2014 is official. House and Senate
approval and the President’s signature are only half the battle, though.
"In 12 titles, the bill provides a cross-section of support for agriculture and rural America—from commodity programs and crop insurance to rural development and research," says Sara Wyant, editor of Agri-Pulse. In the end, 79% of the farm bill funding goes to nutrition.
"Commodity supports are still there in case of significant price declines," she adds. "The big change for farmers—and one we’ll continue to see—is a shift from traditional commodity price support to crop insurance, where farmers have more skin in the game."
Due to the complexity of the farm bill and the fact that farmers will make decisions they have to live with through 2018, the long tail of implementation isn’t so bad.
"Not only does USDA have to write the regulations that go with the farm bill, but they have to develop software for the new programs," says Roger Bernard with Informa Economics Inc. "Use this time to your benefit and take advantage of the various tools and data to make the best decisions for your operation. Set yield and price expectations to help in the decision-making process, as well."
Commodity support. In the commodity title, which was cut by $14.3 billion, direct payments, ACRE (Average Crop Revenue Election) and counter-cyclical payments are out. Two new programs that provide farmers the option to secure revenue- or price-based coverage are in.
The Ag Risk Coverage (ARC) program is available on an individual or county level. This is the "shallow-loss" program many talked about during the farm bill process. If you choose the individual coverage under ARC, all crops are enrolled in that program because it is a whole-farm approach.
The Price Loss Coverage (PLC) program uses target prices to determine if farmers can earn payments under the program. If you choose PLC or the county ARC, you can mix and match which crops on the farm are covered under which program. The target price for corn is $3.70; soybeans, $8.40; and wheat, $5.50.
Choosing which program to participate in is a one-time election that locks you in for the 2014 through 2018 crop years. If you don’t decide, USDA will automatically enroll you in PLC.
"One interesting change to note is that landlords have to agree and sign off on the program," Bernard says.
ARC and PLC payments will be made on base acres. Your total base acres are the same as base acres as of Sept. 30, 2013. Farmers can elect to reallocate base acres among the farm’s covered crops according to each crop’s share of the farm’s total acres planted to those crops from 2009 through 2012. Reallocation can’t result in an overall increase in the farm’s base acres, though.
- March 2014