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Farm Bill Process Starts Soon

In a webinar posted this Tuesday, a Farm Service Agency official and an Iowa State University economist set the stage for a farm bill process that starts soon but is likely to go on for about six months.

Kevin McClure, a program specialist with the Iowa Farm Service Agency office, told viewers that farmers and landowners can expect letters from FSA in August that will describe each farm's existing base acres and program yields that were used for the old countercyclical program. Landowners will have a chance to reallocate their yields to reflect what was planted from 2009 through 2012. And you'll have a chance to update yields based on actual farm yields from years 2008 (not 2009) through 2012. A plug of 75% of the county yield will be substituted for any missing yields.

All of this is optional. You can stick with the old ones. And, McClure said, "The decision to do this has no bearing on what program you decide to elect."

McClure discouraged landownners from rushing into their local FSA offices. They don't have the software to deal with making changes to bases and yields yet, he said. For now, you should look to make sure the information in the letter is accurate, and contact FSA if it's not.

"At this point, you don't want to bring in data," he said. You may want to contact your crop insurance agent to get APH (actual production history), which can be used later to verify your yields at FSA.

"The main thing to look for is the letter that's coming here shortly in August," McClure said.

The exact timing of when farmers will be able to change bases and yields isn't clear. McClure said you'll have an opportunity to do that in late summer, but the final base and yield decisions will be made in winter of 2014, roughly the time that you'll have a chance to choose between three new commodity programs.

ARC, or Agriculture Risk Coverage at the county level, is a new revenue program similar to the old ACRE program, except that ACRE payments were triggered by a drop in state-level revenue, not the county.

An individual farm-level ARC will also be available. It's similar to the old SURE program. It's the only one that is tied to what you plant on your farm. And payments will be calculated on the revenue from all covered crops on a farm.

The other programs have nothing to do with what you actually plant. County-level ARC payments will be tied to your base acres. For the county-level ARC, a farm could be planted to alfalfa but could possibly collect a corn ARC payment if revenue drops enough to trigger it.

The other option to pick is the Price Loss Coverage program, which is similar to the old countercyclical program but with higher target prices that are now called "reference prices." The reference price for corn is $3.70 a bushel. If the marketing year average price for corn, for example, falls below $3.70 a bushel, farms in the PLC program would get a payment tied to any corn base they have. Again, the farm doesn't have to be planted to corn to get a payment.

If you don't enroll in farm-level ARC, known as ARC-IC, then you can put one crop in one program and another in a different one. "The producer can select PLC on one crop and ARC-CO (county-level ARC) on another," McClure said.

Iowa State University economist Chad Hart pointed out that choosing between ARC and PLC is a five-year decision. Whatever you elect will remain in effect for this year's crop through 2018.

"So this is something you'll want to do your homework on," Hart said.

Hart showed slides that outline how both the PLC and ARC programs work. And his last slide, shown on this page, shows when ARC and PLC payments would be triggered for corn.

You can view the entire webinar, which lasts for an hour, here.

Another webcast on ARC and PLC by ISU Extension farm management specialist Steve Johnson can be found here.

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