The new farm bill provides a one-time option to reallocate, but not increase, your base acres for crop insurance coverage. This decision is important because with current low prices for corn and soybeans, Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) will pay only on base acres.
So a change in what you put down for base acres can be substantive to your bottom line, says Paul Neiffer, CliftonLarsonAllen CPA and “The Farm CPA” columnist who spoke at Tomorrow’s Top Producer program today.
“This is a one-time choice – between retaining old set of base acres (could be 20 years or older) or a new mix of crop bases with no increase or decrease in total base acres,” Neiffer says. “It is not mandatory, but it is a voluntary option. If you fail to make this decision, you revert back to what it was.”
Here are the rules:
- Decision rests with the owner of the farm.
- Decision applies to all covered crops
- The following commodities are often called “covered commodities.” They eligible for Farm Bill program payments. Covered commodities include barley, canola, corn, crambe, flaxseed, large garbanzo, small garbanzo, grain sorghum, lentils, mustard seed, oats, peanuts, dry peas, rapeseed, long grain rice, medium grain rice, safflower, sesame seed, soybeans, sunflower seed, and wheat.
- The crop must have been planted for harvest, grazing, haying, silage, or other similar purposes.
- Total base acres on the farm cannot increase.They can only be reallocated.
- Prevented planting must be due to conditions beyond the producer's control, including drought, flood, and other natural disasters.
- All years are included regardless of whether or not acres were planted to a covered crop.
- You can reallocate your base acres on one farm, without reallocating base on other farms.
“This decision will be tougher than the yield update decision, because I think corn is going to pay more than soybeans, but no one knows what the market will do for sure,” he adds.
For more information on the Top Producer Seminar or Tomorrow’s Top Producer events, visit www.TopProducerSeminar.com.
Thank you to the 2015 Tomorrow’s Top Producer sponsors:
Bayer CropScience, Case IH, Conservis