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New farm program to provide enrollment decisions

March 27th, 2014

Contributed by Steven D. JohnsonFarm Management Specialist, Iowa State University Extension, sdjohns@iastate.edu, 515-957-5790.

Johnson_Steve_smThe 2014 farm bill is now law and the USDA Farm Service Agency (FSA) officials are writing rules and regulations to carry out new programs. The five-year farm bill eliminates direct payments, Counter-Cyclical Payments (CCP) and ACRE (Average Crop Revenue Election (ACRE) programs for commodity crops. Replacing them are some new risk management options that farmers must choose from by FSA farm number.

Crop insurance remains the backbone of the farm financial safety net. It will be augmented by the new farm program. Farmers can invest in their own risk management by buying crop revenue insurance so they are protected annually should a decline in yield and/or a drop in futures price occur.

To protect farmers from multiple year downturns in cash prices or a decline in revenue, the new bill introduces two new programs.  Farmers will choose between a revenue program that covers price and yield losses — Agricultural Risk Coverage (ARC) and a price-only program known as Price Loss Coverage (PLC). It will be several months before the new USDA farm program sign-up begins – probably next winter.

Crop coverage options

Farmers who choose ARC will have to make another decision of whether to enroll in county ARC on a commodity-by-commodity basis or choose an individual farm ARC that combines all the program commodities on the farm together.

Payments for the county ARC occur when actual county yield times the national marketing price for a commodity is below the ARC revenue guarantee for that crop year. Farm ARC would issue payments depending on whole farm revenue, since program commodities are combined. The program covers losses on 85% of the base acres for the county option and 65% of base acres for farm coverage.

The ARC guarantee provides a range of revenue protection from 76% to 86% of historical revenue, with farmer-purchased crop insurance expected to cover deeper losses. Farmers who enroll in ARC may not buy (Supplemental Coverage Option) SCO insurance beginning in 2015 because they are very similar products.

PLC is a target-price program that makes payments when national average cash crop prices drop below a “reference price” set in the farm bill. The reference prices are: $3.70 per bushel for corn, $8.40 per bushel for soybeans and $5.50 per bushel for wheat. Beginning in 2015, PLC enrollment also allows the purchase of SCO insurance to reduce the traditional crop insurance deductible levels. Only farmers enrolled in the PLC program may buy SCO insurance and county yields are used.

Farmers along with their landowners on rented ground have to make a one-time, irrevocable decision to enroll a farm in ARC or PLC for the life of the five-year farm bill. If a farmer doesn’t make a decision, farms are automatically enrolled in PLC beginning in 2015.

To help decide on which program to use, farmers may have to review historical planted acres due to the one-time choice of reallocating base acres using the average for the years 2009 through 2012. However, the reallocation of acres by crop cannot exceed the total historical base acreage. In addition, farmers might want to compare yield information for their farms to their county yields for the years 2008 through 2012.

Payment triggers for both the ARC and PLC programs are based on marketing year average prices. Thus any payments for revenue or price losses won’t be made until the year following a loss.

More information to come

It is too early to know for sure which program will be best for Corn Belt farmers, as the final rules and regulations are not yet known. Once USDA releases the information, farmers and landowners should have time to make enrollment decisions.

A preliminary analysis of the two programs suggests, for 2014, ARC’s price coverage level is more favorable for corn and soybeans while PLC’s reference price is more favorable for other crops such as peanuts, rice, barley and wheat. However, farmers will need to consider how the two programs will work over the life of the five-year farm bill; or through the 2018 crop year.

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Farm Bill, Other

Keep Good Planting Records This Spring

May 3rd, 2013

Contributed by Steve Johnson, Extension Farm Management Field Specialist, sdjohns@iastate.edu.

Johnson_Steve_smSpring will arrive eventually, and as you plant corn, soybeans and other crops, keep accurate records. Farmers need to keep track of the date each field is planted, name of the field, how many acres are planted and the crop planted.

Farmers need to keep accurate planting records to report that information to your local USDA Farm Service Agency (FSA) office, to certify your planted acreage. As they do each year, FSA staff will include the information in your acreage report–FSA form 578—which is kept on file at FSA. The information will be used not only by FSA but also by your crop insurance agent to enter into the Risk Management Agency (RMA) database.

Need to certify planted acreage with FSA for farm program and crop insurance

Reporting of planted acreage information to FSA is commonly referred to as “acreage certification.” Farmers certify their planted acreage each year. For 30 years or so farmers have been certifying their planted acreage each year with FSA, so this requirement is not new. But this spring with the late start on planting and what will end up being a rush to get the crop in the ground, it’s important to remember to keep track of their planted acreage information.

With technology in the tractor cab today, how much does that help farmers keep track of information needed for acreage certification? Some farmers are using digital cards and provide their planting information electronically to their FSA office or to their crop insurance agent. But agriculture generally is in the very early stages of certifying acres electronically. Most farmers are still writing down the number of acres and crop planted and related information by hand, and the data is transferred to FSA form 578 by hand.

July 15 is deadline to report 2013 planted acreage to FSA

You have until July 15 to report your planted acreage information to your FSA office,  and it probably wouldn’t hurt to do this in person, just in case someone on the other end of the conversation has a question, or needs a clarification. A lot of farmers, as soon as they are done planting, want to get their information to FSA as soon as possible. And local FSA offices are going to get pretty busy in the next few weeks—with acreage certification and other farm program activities such as ACRE enrollment and CRP and CSP sign-ups.

Most farmers find it works best to keep records while they are actually planting—so they don’t forget or don’t get fields confused as to which information goes with each field. For each field, some also keep track of fertilizer and herbicide applications, tillage practices used, etc. But you definitely need to keep track of the planting information that both FSA and RMA requires.

Traditionally, the deadline for farmers to certify their planted acreage with FSA was June 30. But last year USDA FSA moved it to July 15 to avoid confusion with the crop insurance reporting deadline. Now both deadlines are July 15.

Since the crop insurance billing date has been moved up to August 15, providing a copy of that acreage report well in advance of the July 15 deadline will assure more timely crop insurance data entry and receipt of your premium notice. The 2013 crop insurance premium is due in September. To avoid a penalty, payment must be received by October 1, which is one month earlier than in the past.

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Crop Insurance, Farm Bill

Producers can choose their farm program for 2013

February 12th, 2013

Contributed by William Edwards, extension economist

Rather than craft a new farm bill this winter, Congress passed the American Taxpayer Relief Act of 2012, which extended the previous farm bill (Food, Conservation and Energy Act of 2008) for another year. The provisions for the Average Crop Revenue Election (ACRE) and Direct and Counter-cyclical Payment Program (DCP) will be unchanged from 2012, with one exception. Producers who enrolled in ACRE during the 2009 through 2012 crop years were obligated to remain in ACRE through 2012. That obligation does not extend through 2013, however. Each producer can choose to enroll each farm that she or he manages in either the DCP program or the ACRE program this year, regardless of which program the farm was enrolled in last year. The Farm Service Agency will begin sign-ups for DCP and ACRE for the 2013 crops on February 19, 2013. The DCP sign-up period will end on Aug. 2, 2013, and the ACRE sign-up period will end on June 3, 2013.

Briefly, two gross revenue per acre triggers are in effect under ACRE, one at the farm level and one at the state level. Actual revenues, based on the farm and state yields and the average marketing year price for the September through August period, must be below both of the corresponding trigger levels for a payment to be made. Farm level triggers will depend on recent yields for each farm, but the state level trigger is the same for everyone. The ACRE program does not allow the state trigger to increase or decrease more than 10% from one year to the next. For the past three years, increases in both the corn and soybean revenue trigger levels in Iowa have been limited due to the 10% cap. Thus, they have not increased as fast as actual revenues, and no ACRE payments have been made in Iowa during the time the program has been in effect.

The state level trigger revenues for Iowa for the 2013 crop are currently projected as $781 per acre for corn and $574 per acre for soybeans, using the current USDA forecasts for the 2012 average marketing year prices. These could change slightly over the next 7 months. This means that if the state average corn yield for 2013 is 160 bushels per acre, for example, the marketing year price for the 2013 crop will have to average less than $4.88 per bushel to trigger an ACRE payment. Likewise, if the state average soybean yield is 47 bushels per acre, for example, the 2013 marketing year price will have to average less than $12.21 per bushel to trigger a payment. Current futures contracts covering the 2013 marketing year are projecting prices substantially higher than these.

As before, enrolling in ACRE reduces the farm’s direct payments by 20%. Conversely, farms that have been enrolled in ACRE in the past can decide not to enroll in 2013, and receive 100% of their direct payments. Payments rates will be the same as in 2012, and funds will be distributed in October.

To analyze their individual signup decisions, producers can use the ACRE Payment Estimator, decision tool A1-45 on the Ag Decision Maker website. For more information visit your county Farm Service Agency office.

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Farm Bill

2011 SURE payment sign-up begins October 22nd, 2012

October 22nd, 2012

Contributed by Steve Johnson, Extension Farm Management Field Specialist, sdjohns@iastate.edu.

If you think you’re eligible for USDA’s 2011 Supplement Revenue (SURE) Assistance program payment, sign-up begins October 22, 2012.

SURE provides benefits based on farm revenue losses due to natural disasters. Producers who suffered a production loss in the 2011 crop year are encouraged to visit their local FSA office to learn more about the SURE program and how to apply.

The SURE program covers crop losses incurred from disasters in 2011, the amount not covered by crop insurance.

A farm or ranch must have:

1) at least a 10 percent production loss on a crop of economic significance
2) insured all economically significant crops
3) been physically located in a county that was declared a primary disaster country or contiguous county by the U.S. Secretary of Agriculture under a Secretarial Designation

Without a Secretarial Disaster Designation, individual producers may be eligible if the actual production on the farm is less than 50 percent of the normal farm production, due to a natural disaster.

In Iowa, eligible counties for the potential 2011 SURE payment that were either primary or contiguous counties are:

Primary: Clarke, Davis, Decatur, Fremont, Harrison, Henry, Jefferson, Jones, Keokuk, Lee, Linn, Louisa, Lucas, Mahaska, Marshall, Mills, Mitchell, Monona, Monroe, Montgomery, Page, Polk, Pottawattamie, Tama, Taylor, Van Buren, Wapello, Washington, Wayne, Woodbury

Contiguous: Adams, Appanoose, Benton, Black Hawk, Boone, Buchanan, Cass, Cedar, Cerro Gordo, Cherokee, Chickasaw, Clinton, Crawford, Dallas, Delaware, Des Moines, Dubuque, Floyd, Grundy, Hardin, Howard, Ida, Iowa, Jackson, Jasper, Johnson, Madison, Marion, Muscatine, Plymouth, Poweshiek, Ringgold, Scott, Shelby, Story, Union, Warren, Worth

More on SURE is available in AgDM Information File A1-44, including information on counties designated as disaster counties in 2011. If you have specific questions or need details regarding USDA farm programs including SURE, contact your local USDA Farm Service Agency office. Get news and information about SURE and other USDA programs at www.fsa.usda.gov.

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Farm Bill ,

Drought Economics: Frequently Asked Questions

July 31st, 2012

Have questions regarding crop insurance, valuing corn silage, or the ACRE Program? Chad Hart, ISU extension and outreach economist has compiled answers to address many of the  questions that have come to ISU Extension and Outreach in the last several weeks concerning the 2012 drought. The PDF publication is available through the ISU Extension and Outreach Frequently Asked Questions page. More resources are also available for crops, livestock, home & yard, and financial concerns.

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Crop Insurance, Crop Outlook, Farm Bill

Updated spreadsheet with projected ACRE payment rates for Iowa crops

June 8th, 2012

Chad Hart , ISU Extension Grain Marketing Specialist

The 2008 Farm Bill created the Average Crop Revenue Election (ACRE) program. This program provides payments to crop producers when state-level estimated revenues from crop production fall below guaranteed levels. For a detailed description of the program, please see Average Crop Revenue Election (ACRE). In the Crop Production and World Agricultural Supply & Demand Estimates reports, USDA provides projections for the season-average prices and crop yields that will determine ACRE payment rates. The spreadsheet calculates the projected ACRE payment rates, based on the latest price and yield projections. The spreadsheet also shows possible ACRE payment rates for given prices and yields around those projections. As the spreadsheet shows, ACRE payment rates can change quickly as prices and yields shift. This spreadsheet was recently updated with new projections for ACRE payments for corn and soybeans.

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Farm Bill

2012 DCP & ACRE Sign-up ends June 1st

May 11th, 2012

Contributed by Steve Johnson, Extension Farm Management Field Specialist.

The USDA Farm Service Agency (FSA) is wrapping up enrollment for the 2012 Direct and Counter-Cyclical Program (DCP) and also the 2012 Average Crop Revenue Election Program (ACRE) Program. Sign-up began on January 23rd, 2012 and ends on June 1st, 2012.
 
The 2012 DCP and ACRE contract signatures for enrollment are also due by the signup deadline of June 1st.  It is the responsibility of the operator and owners of a farm to obtain and submit all necessary signatures on election and enrollment forms by this deadline.
 
The DCP provides producers an income safety net in the form of annual direct payments. Also, counter-cyclical payments can be provided when commodity prices fall below certain price levels. Some of the delay in this year’s sign-up might have been the fact that there will be no advanced direct payment for the 2012 crop year. Entire direct payments will be issued after October 1st, 2012 and will reflect on 85% of your farms’ base acres.

The ACRE program provides eligible producers a state-level revenue guarantee, based on the 5-year state Olympic average yield and the 2-year national average price. ACRE payments are made when both state and farm-level triggers are met.

By participating in ACRE, producers elect to forgo counter-cyclical payments, receive a 20-percent reduction in direct payments and a 30-percent reduction in loan rates. The decision to elect ACRE binds the farm to the program through the 2012 crop year.

The projected 2012 ACRE state trigger revenue for Iowa is $709.50 per acre. It might be difficult to trigger the ACRE payment in Iowa for the 2012 crop. Considering an Iowa average corn yield of 171 bushels per acre, the national average cash price for corn in the 2012-13 marketing year would need to fall below $4.15 per bushel.

If you have specific questions or need details regarding USDA farm programs including DCP or ACRE, contact your local USDA FSA office. You can also get news and information about USDA programs at www.fsa.usda.gov

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Farm Bill

DCP & ACRE Sign-up

January 31st, 2012

Contributed by Steve Johnson, Extension Farm Management Field Specialist.

The FSA County Office began enrollment for the 2012 Direct and Counter-Cyclical Program (DCP) and also the 2012 Average Crop Revenue Election Program (ACRE) Program on January 23rd, 2012 and will continue through June 1st, 2012.

There will be no advanced direct payment for the 2012 crop year. Payments will be issued after October 1st, 2012 and will reflect on 85% of your farm base acres.

The ACRE program provides eligible producers a state-level revenue guarantee, based on the 5-year state Olympic average yield and the 2-year national average price. ACRE payments are made when both state and farm-level triggers are met. By participating in ACRE, producers elect to forgo counter-cyclical payments, receive a 20-percent reduction in direct payments and a 30-percent reduction in loan rates. The decision to elect ACRE binds the farm to the program through the 2012 crop year.

Planted crops considered eligible for ACRE payments include but not limited to: wheat, barley, oats, grain sorghum, corn, pulse crops (dry peas, lentils, chickpeas or garbanzo beans), oilseeds (soybean, canola, crambe, flaxseed, mustard seed, safflower).

The Direct and Counter-Cyclical Program (DCP) provides producers an income safety net in the form of annual direct payments and counter-cyclical payments when commodity prices fall below certain price levels.

The 2012 DCP and ACRE contract signatures for enrollment are due by the signup deadline of June 1st, 2012.

If you have specific questions or need details regarding USDA farm programs including DCP or ACRE, contact your local USDA Farm Service Agency office. You can also get news and information about USDA programs at www.fsa.usda.gov

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Farm Bill

Sign-up for 2009 SURE Payments

January 18th, 2011

John R Whitaker, State Executive Director of USDA’s Iowa Farm Service Agency announced that disaster assistance under FSA’s Supplemental Revenue Assistance Program or SURE program began on January 10, 2011. “Sign up for this program is currently underway and continues until July 29, 2011,” said Whitaker. To be eligible for SURE a farm or ranch must have:

  • At least a 10 percent production loss on a crop of economic significance
  • Insured all economically significant crops
  • Been physically located in a county that was declared a primary disaster country or contiguous county by the Secretary of Agriculture under a Secretarial Designation.

Without a Secretarial disaster Designation, individual producers may be eligible in the actual production on the farm is less than 50 percent of the normal production on the farm due to a natural disaster.

Counties eligible for 2009 SURE payments are shown in the image below. For more on SURE visit the Ag Decision Maker Information File A1-44.

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Farm Bill

Additional Disaster Payments for 2009 Iowa Soybeans

October 26th, 2010

Chad Hart, ISU Extension Grain Marketing Specialist, provides information on payments via the Crop Assistance Program (CAP) .

USDA has announced additional disaster payments for the 2009 crop year via the Crop Assistance Program (CAP). Payments will be made to producers of rice, upland cotton, sweet potatoes, and soybeans in counties that received Secretarial disaster designations in 2009 for excessive moisture or related conditions. In Iowa, 30 counties qualify for the payments. A list of the counties and a map are provided below. In order for producers to qualify for payments, they must have suffered a 5 percent crop loss in 2009 from excessive moisture or related conditions. The 5 percent crop loss requirement is based on a comparison of the producer’s 2009 actual yield to the higher of the producer’s crop insurance APH yield or the county expected yield as determined by the Farm Service Agency (FSA) State Committee. The payment is based on a flat dollar per acre amount, $15.62 for soybeans. If the total payments under the CAP exceed $550 million, then the payment rate will be prorated to cap payments at $550 million. A qualified producer will receive the payment on all 2009 planted acres for the eligible crops on land that is physically located in one of the Secretarially declared disaster counties.

Producers will initially receive 75 percent of their expected payment, with the remaining amount being paid when sign-up is complete and the final payment rates are determined. There is a payment limit of $100,000 per producer in this program. And the payments will be considered as revenue under the Supplemental Revenue Assistance Payments (SURE) program for 2009.

The CAP payments are being administered by the FSA. To sign-up, visit your local FSA office. Sign-up for the payments began today (October 25, 2010) and continues through Thursday, December 9, 2010. Producers will self-certify the crop losses, but should have documentation to support the crop loss claim. Acreage will be certified from FSA acreage reports. CAP is being funded from a standing USDA program that allows the Secretary of Agriculture to reestablish the purchasing power of agricultural producers.

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Crops, Farm Bill