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Update, Elect and Enroll Your Farm In New Commodity Programs

DES MOINES, Iowa – In early August, USDA’s Farm Service Agency will send every landowner and operator a summary of their acreage history; Farm Management Specialist Steven Johnson with Iowa State University says to make sure it doesn’t get thrown away.

Recipients will have a chance to update their base acres or leave them be, and optionally to update yields. It’s part of the new farm bill, which did away with direct and counter-cyclical payments, as well as the ACRE program. Instead, farmers will now choose between the revenue-based ARC program or the Price Loss Coverage program.

The Agricultural Risk Coverage program (ARC) pays when a yield-and-price formula figures out below a guarantee based on prior production, and ARC can be selected at either the county or the individual farm level. PLC will pay farmers when a commodity’s marketing-year-average price falls below a reference price; on corn it’s $3.70/bushel and on soybeans, $8.40/bushel.

The August letter from FSA is just the first of three steps for the new programs, which Johnson says are best thought of as update, elect, and enroll.

“So, in the summer and fall, of 14′, update,” Johnson says. “Retain base acres, reallocate base acres, and/or update yields, using the five-year period 2008 through 2012, if a commodity crop was planted on the farm. Then, late fall likely will be the five-year election that the landowner will be signing and that will be the commitment to that farm for county ARC, farm ARC, or PLC. Then, in early 2015, that will be the actual enrollment of that farm, and enrollment will take place annually.”

ARC and PLC are both fairly complex, and the decision farmers make this year will be effective for five years, which is atypical for a commodity program. Johnson says this marketing year, the forecast for average year cash prices means the PLC program is unlikely to make a payment for this year, even with a bumper crop.

“However,” he says, “we would likely trigger an ARC payment, especially at the county, and likely a farm-level ARC [payment] with a cash corn price of $4.00/bushel. Because ARC uses revenue; yield times price, it will generally be easier to trigger an ARC payment.”

To help demystify the process, ISU will hold a series of meetings across central Iowa to discuss the FSA materials coming in the mail, with the second meeting today in Boone. A list of the meetings is reproduced below.

Monday, July 28 – Oskaloosa
Tuesday, July 29 – Boone
Wednesday, July 30 – Altoona
Thursday, July 31 – Nevada and Grinnell
Friday, Aug. 1 – Knoxville
Monday, Aug. 4 – Adel
Tuesday, Aug. 5 – Newton
Wednesday, Aug. 6 – Indianola

To hear more about FSA’s rollout of new commodity programs, click here.