STRAIGHT FROM THE HORSES MOUTH

Duane A. Lienemann
UNL Extension Educator

     I cannot remember the last time that I drove to work in rain.  I wasn’t totally sure that my windshield wipers even worked, but they did. We are not used to getting moisture, and especially this time of year, and it certainly is welcome.  I know it is too little too late for some of our hay ground, pastures and crops in the southern half of our county and some adjacent counties, but none-the-less it is much needed moisture to help finish out this crop season and hopefully give us some headway in developing some subsoil moisture to be stored for next year. One think is for certain, it certainly makes a person feel better. I can only imagine what our area farmers take is on this moisture after such a dicey year. 
     Speaking of dicey, to add to the variability of climate our farmers are faced with a new and very complicated Farm Bill.  I have fielded several questions on this already and I understand the angst that our producers are experiencing. Signing up for the new  government farm program as part of the new Farm Bill is going to be complicated and will most likely take up to 6 months to complete. As I understand it, sign up will be a 2 step process that will likely stretch well into 2015.  
     Producers have started receiving their farm constitution reports from their local FSA offices that provide the farm number, legal description, and most importantly, their current farm base acres and CC yields.  This information is made available to producers ahead of their first USDA farm bill decision – “Should I update my base acres and/or CC yields?”  While I believe that this decision is not clear cut, you might reason that if you have been using the same corn and soybean rotation, then there may not be much change in your base. But, if in the past few years you have planted more corn than soybeans or wheat, then you may want to update your base to reflect more corn acres. However, that is just a guess!
     The way it looks to me is that by increasing your corn base you may have some financial advantages as there is likely to be more payments for corn under these new programs over the next 5 years, so a higher corn base would be financially advantageous. I personally believe that our area producers should look hard at updating simply because I think you may want to take that one time opportunity to update yields -- especially if you have higher yields than what they currently have on record with FSA. If you have not had any worthwhile increases then it probably is not quite as important or clear to me.
     After you update your yield and acres, then it will be time to decide which farm program best fits your operation. Unfortunately not all the details of the programs have been announced yet, so it is hard to give specific recommendations to producers. It should be not much of a shock then for you to hear your local FSA office say that the yield and base updates can begin this month ---but that program signup will not take place for several months. My guess we may be seeing some sign up beginning late this fall or during the winter months, but most likely the bulk will be just before planting season.
     Farmers will have a choice of signing up for one of two versions of the Agriculture Risk Coverage (ARC) program or the Price Loss Coverage (PLC) program that replaces direct payments and the ACRE program. This decision will be made for each Farm Service Agency (FSA) farm. In general, ARC would pay out when actual county crop revenue is below the county ARC revenue guarantee for a crop year. Farmers will have to choose between ARC and PLC, but early indicators suggest ARC might be a better bet and a good place to start investigating farm bill options. 
     While recommendations are preliminary, most economists prognosis seem to indicate says that most operations may find the Agricultural Risk Coverage-County Option the most favorable. I think this may depend on a lot of things, including the projected price over the next 4-5 years, if the drought is really over, and if the bulk of your farm is dry-land or irrigated. From everything I have read, it seems to me that this new government program, also referred to as ARC-CO, currently has a higher probability of adding support to corn and soybean farmers. But let us look at the options.
     Farmers will have the option to choose between two versions of the ARC program: County-ARC or Individual-ARC. The first program allows producers to participate on a crop by crop basis and protects based off of county revenue losses. The second program provides individual farm level protection, but all of a farm’s commodities must be enrolled in the program if the farmer selects this option. Individual-ARC is more complicated than its County-ARC counterpart.
      I know that some farmers may look at Price Loss Converge or PLC target price program which basically operates similarly to the old Counter-Cyclical payment program. However, under this new program, a payment would trigger if the U.S. average market price for the crop year is less than the set reference price. While the target price program was a non-factor in recent years, USDA’s price projections for 2014 might make this attractive for farmers who worry about crop prices more than revenue. Plus there is some insurance consideration with PLC you should explore. If you listen to some crop forecasters that say that we may see $2.75-$3.25 corn over the next 3-4 years, then this option may look pretty good. 
     Like the decision to sign up for ACRE in the last farm bill, farmers will have one chance to make a decision as to which program (County-ARC, Individual-ARC or PLC) they will participate in through the life of the five-year farm bill. If a farmer does not choose an option, they are automatically enrolled in PLC (which is the default) but will receive no benefits for their 2014 crop. The only advice I can really give you right now is to start gathering your data on base crop acres and yields. I do have a question for all our readers……..Does anyone have a crystal ball?  Good Luck!!!!

The preceding information comes from the research and personal observations of the writer which may or may not reflect the views of UNL or UNL Extension. For more further information on these or other topics contact D. A. Lienemann, UNL Extension Educator for Webster County in Red Cloud, (402) 746-3417 or email to: dlienemann2@unl.edu or go to the website at: http://www.webster.unl.edu/home