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Update begins for PLC and ARC crop programs

Aug. 11, 2014 | 0 comments


By now, most farmers who participate in federal commodity crop programs should have received a letter from their county Farm Service Agency office regarding their planted acreage of those crops in recent years and their update choices under the federal Farm Bill for the next 5 years.

In conjunction with the sending of the letter, University of Wisconsin Extension Service agricultural economist Paul Mitchell has issued an advisory indicating the importance of responding to the letter and outlining the three options that farmers have for taking part in the commodity programs included in the new Farm Bill.

A first step to signup

The letter, which Mitchell describes as "the first step" for commodity program enrollment under the new legislation, applies to eligible farmers who report their current base acres and payment yields along with the history of acres that were planted or considered planted during 2009-2012, he explained.

What the eligible farmers need to do is to check the accuracy of that information and to begin assembling their crop production records in preparation for the commodity crop program signup that is anticipated during the coming winter, Mitchell pointed out. He noted that this information will affect the options they have for that program and the level of potential payments under those programs.

This first step in the process gives farmers the opportunity to update their base acres and commodity program crop yields, Mitchell observed. Once the update is completed, farmers can sign up for one of the new programs, he said.

Choice of options

Although not greatly different from previous commodity crop programs, there is new terminology for what's available under the new Farm Bill, Mitchell indicated. The named options are Agriculture Risk Coverage (ARC), which is offered on either a whole farm or county level crop by crop basis, and Price Loss Coverage (PLC).

The final program details for those programs and a signup date (likely during the winter) have not yet been announced, Mitchell reported. What's known, however, is that PLC is virtually the same as the previous counter-cyclical programs but with higher target prices and that the choice that farmers make among the three options will be in place at least through 2018, he remarked.

Extension Service agricultural economists in other states, particularly those with large shares of rented cropland, point out that the new signup should stimulate good communication between the farmer tenants and the landlords, some of whom might not be very aware of the program changes. They note that tenants sometimes don't share their yield data and that rental rates might also be at stake.

Crop acre allocations

The new Farm Bill allows farmers who are enrolled in the programs overseen the Farm Service Agency (FSA) to shift the mix of their base acres to match the crops that they planted in 2009-12 but not to increase their total base acres, Mitchell explained. Because of the record high prices for corn and soybeans during recent years, it's likely that many farmers grew more acres of those crops than is indicated in their current base acre allocations, he observed.

What farmers should do after receiving the letter is to confirm that the numbers indicated in the FSA report match what they what they actually planted during 2009-12 because the historical acres will define their options for updating their base acres, Mitchell advised. They should also check if the number of acres indicated in the letter match what they have planted as base acres and for which they have obtained direct payments, he added.

Any discrepancies with the FSA data can be corrected once the dates for the updating are announced, Mitchell continued. While farmers will not be required to update their base acre crop mix, it might be beneficial in many cases to provide an update because the crops associated with their base acres will define their payments for PLC or either type of ARC, he suggested.

Options on payment yields

Another provision of the new Farm Bill allows farmers to update their payment yields, Mitchell pointed out. They could elect a payment yield rate of 90 percent of the farm average yield per planted or considered planted acre during the years 2008-12, he explained.

Farmers who have now have higher payment yields than their current payment yields will likely want to make an update, Mitchell observed. That's because the higher payment yields will boost their options under the new Farm Bill commodity support programs, he stated.

Establishing higher payment yields will increase both the PLC payments when such payments are triggered and the ARC individual farm guarantee and even make the latter more likely to be triggered, Mitchell remarked. He noted, however, that payment yields will not be tied to the county ARC program option because those payments are triggered only by county yields and national prices.

An additional reason to update payment yields is the probability that it will be several years before another opportunity for such updating arises, Mitchell indicated. He predicted that any new commodity support programs in future Farm Bills will use similar criteria to determine those payments.

The latest current information on PLC and ARC is available on the https:www.fsa.usda.gov/FSA/wbapp?area=home@subject=arpl@topic=landing website under the title of Base Allocation, Yield Updates, Price Loss Coverage (PLC)) & Agricultural Risk Coverage (ARC).

Upcoming activities

Although the current FSA letter does not include any information on crop production, farmers should assemble their 2008-12 production records in order to be prepared for the new signup dates and deadlines, Mitchell suggested. In most cases, he expects that crop insurance records will suffice but he cautions that the FSA has the final decision on what will be accepted as production records.

The updating of base acres and crop yields is likely to be the first experience that most farmers have with the provisions of the new Farm Bill but the legislation also include several other new programs and options, Mitchell observed.

One of them, available in some Wisconsin counties, is the new crop insurance supplemental coverage option for growers of winter wheat. The first sales closing date for that option is Sept. 30.

Another new offering is the Margin Protection Program for milk production, for which signups will taken starting on September 2. Information programs on that new insurance program are being organized by Extension Service offices around the state in the coming weeks.

Mitchell can be reached by e-mail to pdmitchell@wisc.edu, @mitchelluw on Twitter, or on the http://www.aae.wisc.edu/mitchell/extension.htm website.

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