Embed Size (px)
DESCRIPTION
2014 Farm bill COMMODITY programs. Dr. Jody Campiche Dr. Eric DeVuyst Department of Agricultural Economics Oklahoma State University. Disclaimer. This information is based on my reading of the 2014 farm bill and discussions with Congressional Agriculture Committee staff - PowerPoint PPT Presentation
Citation preview
2014 FARM BILL COMMODITY PROGRAMS
Dr. Jody Campiche
Dr. Eric DeVuyst
Department of Agricultural Economics
Oklahoma State University
Disclaimer
This information is based on my reading of the 2014 farm bill and discussions with Congressional Agriculture Committee staff
I know there will likely be differences in my interpretation and the final rules and regulations
This information is intended to be for educational purposes only
Additional information will be available before most decisions need to be made
2014 Farm Bill
One-time decision to reallocate base acres **total base acres cannot increase (will be the
same as on Sept. 30, 2013)
One-time decision to update CC yields on a farm
One-time (5 year) election of: Price Loss Coverage (PLC) Ag Risk Coverage – County (ARC-CO) Ag Risk Coverage – Individual (ARC-IC)
Owner/Operator Acreage History Letters
Should have received a letter with basic background of base acreage
Should receive a Summary Acreage History Report Acreage of covered commodities reported to FSA
from 2008-2012 Includes your base acreage and CC yield as of
9/30/13 Contact your local FSA office if your acreage history
is incorrect Collect your 2008-12 yield data
Decisions at the FSA office
Do you want to update your base acreage?
Do you want to update your FSA payment yields?
Do you want to enroll each crop/farm in ARC or PLC?
Payment Acres
ARC/PLC paid on base acres Do NOT have to plant to receive ARC/PLC on base acres (not
including cotton base acres)
PLC calculation uses the FSA payment yield
Decisions at the crop insurance office
If you chose not to enroll a crop/farm in ARC, do you want to purchase SCO?
Are you comfortable with a county-level product
SCO only pays if the county has a loss but the premium is much cheaper than an RP policy
Reallocation of Base Acres
Option to retain or reallocate total base acres to crops planted in 2009-2012
Reallocation is in proportion to the ratio of the 4-year average of planted acres for each covered commodity
Reallocation of Base Acres
Example: Producer has 80 acres of wheat base
In the past 4 years, planted 160 acres - 40 acres of wheat (25%) and 120 acres of corn (75%)
Can retain 80 wheat base acres or reallocate 25% to wheat and 75% to corn (so 20 wheat base acres and 60 corn base acres)
Base Reallocation Example
2009 2010 2011 2012
Corn 0 0 200 200
Grain Sorghum
150 100 0 0
Wheat 250 300 200 200
Totals 400 400 400 400
Yield Update
Updated payment yield = 90% of the average of the yield per planted acre for the 2008-2012 crop yearsExclude any year when no acreage was planted
to the covered commodityWill likely use crop insurance APH yield data for
2008-2012
Producers with yields in any of the 2008-2012 years that are < 75% of the county average yield can use 75% of the 2008-2012 county average yield as a substitute The substitute yield for Garfield County Wheat = 24
Yield Update Example
Wheat CC yield = 35 bu Garfield County 75% of 2008-12 yield = 24 (75%
of 24 = 18)
2008 2009 2010 2011 2012 Avg Yield
90% of Avg Yield
Wheat 45 15 42 10 43 35 31
75% Avg Garfield County Yield
24 24 24 24 24
New Programs
ARC
SCO
PLCCROP INSURANCE
COMMODITY PROGRAMS
4 Commodity Program/Crop Insurance Choices
PLC
PLC + SCO
ARC-County
ARC-Individual
Plant a different crop than base crop
Distinction between programs tied to base acres and programs tied to planted acres
ARC/PLC paid on base acres SCO paid on planted acres
Payment limits exist for commodity programs but not for crop insurance programs
Important Points
Important Points
The decision to enroll in ARC/PLC varies by crop, region, farm size, etc…
SCO may not be an attractive option for some crops/regions/farms
ARC/PLC paid on 85% of base acres, SCO paid on 100% of planted acres
Farm Program Choices
Interaction between programs
Choices will all take place at different times
This may be particularly confusing for ARC/PLC and SCO No SCO for 2014 crop year
SCO sign-up for the 2015 crop year will occur before ARC/PLC sign-up for the 2014 crop year (for fall planted wheat)
Farm Program Choices
PLC
PLC – price protection
Payment if actual national average marketing year price < reference price
Paid on 85% of base acres
Do not have to plant to receive payment if payment is triggered
PLC
Crop PLC Reference Price
Barley 4.95
Corn 3.70
Cotton NA
Grain Sorghum 3.95
Peanuts 535
Oats 2.40
Rice 14.00
Canola 20.15/cwt
Soybeans 8.40
Wheat 5.50
ARC
ARC – revenue protection
Option to choose farm or county level coverage
Farm paid on 65% of base (includes whole farm revenue)
County paid on 85% of base
Do not have to plant to receive payment if payment is triggered
ARC
Similar to ACRE in 2008 farm billKey differences:
County level trigger (ACRE had a STATE/farm trigger)
Payment limited to 10% of the benchmark revenue Huge difference for OK wheat ($45-$60 ACRE
payment compared to $16-$20 ARC payment)
PLC vs. ARC County
Both are limited by $125K payment limit per entity
Both paid on 85% of base acreage
ARC – limited to 10% of benchmark revenue ($160-$210 for wheat)
PLC vs. ARC County
PLC – limited to:$5.50 – actual price * FSA payment yield
Ex. $5.00 price and 35 bu FSA payment yield = $17 PLC
Ex. $4.75 price and 35 bu FSA payment yield = $26 PLC
Ex. $4.50 price and 35 bu FSA payment yield = $35 PLC
Then if you add SCO and the county has a revenue loss, you could get an SCO payment
The maximum SCO payment is higher than the maximum ARC payment but you do pay a premium for SCO
SCO
Shallow loss insurance program that covers county-wide losses and complements a producer’s individual insurance policy
Requires that producers purchase an underlying insurance policy
Covers the difference between 86% and the level of coverage of the producer’s individual insurance policy
65% subsidy
SCO
County-level policy endorsement that is in addition to an underlying crop insurance policy
Starts in 2015 – can enroll each year as long as ARC is not selected for the crop/farm
Producers who elect to participate in ARC are not eligible for SCO for the crop and farm participating in ARC
SCO Decision Tool
SCO Expected Area YieldsAlfalfa 35.3 Jackson 27.2Beaver 27.3 Kay 30.6Beckham 21.7 Kingfisher 30.2Blaine 27.5 Kiowa 26.7Caddo 30.5 Logan 31.3Canadian 30.9 Major 30.3Cimarron 20.7 McClain 31.7Comanche 23.7 Noble 25.4Cotton 24.0 Oklahoma 33.2Custer 28.5 Ottawa 33.1Dewey 26.5 Payne 26.5Ellis 21.5 Roger Mills 24.5Garfield 33.2 Texas 33.5Garvin 31.9 Tillman 26.2Grady 28.1 Wagoner 31.7Grant 32.5 Washita 27.6Greer 24.2 Woods 31.8Harmon 26.6 Woodward 26.5Harper 25.4
SCO: Slightly Confusing PLC/ARC Details
Example 1 Producer has 100 acres wheat base and
enrolls the wheat in ARC – plants 100 acres of wheat – CANNOT enroll wheat in SCO
Example 2 Producer has 100 acres of wheat base,
enrolls the wheat in ARC - plants 100 acres of corn – CAN enroll the corn in SCO
SCO/RP/YP/ARC/PLC Decisions
Is ARC a better option for your crop/farm?
Is your base acreage different than your current planted acreage?
Will you reallocate base acreage?
What is your current RP/YP coverage level?
What is the cost of higher RP/YP coverage?
Do you have enterprise units?
Are you planting a large amount of acreage over your base?
Timeline
Sept 30, 2015 – elect SCO for 2015 wheat
Late Summer/Early Fall 2015 – update yields and reallocate bases
Winter 2014 – final base and yield notices issued, elect ARC/PLC
Winter 2014 – withdraw from SCO if you elect ARC
Early 2015 – Enroll in ARC/PLC for 2014 and 2015
OSU/KSU Decision Tool
Results
![THE 2008 FARM BILL FRIEND OR FOE TO C W ...vjel.vermontlaw.edu/files/2013/06/The-2008-Farm-Bill...2011] The 2008 Farm Bill 549 the Farm Bill since 1938, when Congress added payments](https://img.pdfslide.us/doc/110x75/5b2208827f8b9a5a7f8b459b/the-2008-farm-bill-friend-or-foe-to-c-w-vjel-the-2008-farm-bill-549-the-farm.jpg)
