Make Sure to Review Your Base Acres
Feb 23, 2014
One of the original proposals in the farm bill discussion was to make payments based on actual production, not base acres. Well, this did not happen, so for 2014-2018 crop years, your actual ARC or PLC payments will be made based upon your base acres. For county elected ARC or PLC provisions, this payment will be based upon 85% of your base acres. For individual ARC coverage, these payments will be made based upon 65% of base acres. As you can see from this 23.5% reduction in base acres, there will probably not be many times when you will elect individual ARC over county ARC.
Also, remember that you have to make an one-time election to either elect PLC or ARC for the 2014-2018 crop years. If you do not make an election, you will be locked into PLC beginning in 2015 and you will not receive a payment for 2014. Also, if you elect ARC, all producers in the farm including cash landlords will be required to sign off on ARC. This will result in actual yields being shared with landlords. This may sway a farmer toward PLC coverage.
You will be granted a one-time option to reallocate your base acres from the "old" base to a "new" base that will be calculated by taking each crop's share of the farm's total acres planted to covered crops over the 2009-2012 crop years. For example, let's assume a farmer had a total of 2,000 base acres comprised of 650 wheat acres, 700 corn acres and 650 soybean acres. During the 2009-2012 crop years, the farmer actually averaged 1,600 corn acres and 400 soybean acres due to the rise in corn prices and related agronomy changes. Based on this one-time reallocation option, the farmer could update their base acres to reflect 1,600 corn and 400 soybeans acres.
This decision would be based upon the farmer's expectations regarding crop prices for each of the crops grown by the farmer and by placing the "old" base acres into a spreadsheet and then calculating the same expected payments based upon the "new" base acres.
The farm bill allocated about $3 million to extension universities to help develop ARC/PLC calculators. We will most likely start seeing some of these over the next month or so. Most likely the sign-up period will not occur until at least April and will go into at least mid-summer.
We will keep you posted.