By Dennis Reyman, AFM, ARA – The new and much-anticipated Agricultural Act of 2014, aka “the Farm Bill”, was signed into law by President Obama on February 7th. This farm bill contains a considerable amount of change from previous farm bills, probably the biggest changes to the Commodity Title since the 1996 bill which introduced “Freedom to Farm”, untying base acres and actual production.
Changes include less spending in the Commodity Title, Conservation, Nutrition, and an increased spending in Research, Energy, Specialty Crops, and mostly to Crop Insurance. This bill is projected to save $16.6 billion over ten years, plus an additional $6.4 billion via sequestration, according to the Congressional Budget Office.
As we’ve expected for a long time, direct, counter-cyclical, and ACRE payments have been eliminated. In their place we have the choice of Agricultural Risk Coverage (ARC) or Price Loss Coverage (PLC). This choice is one-time and is irrevocable for the life of the program. Cotton has a new commodity-specific program called Stacked Income Protection (STAX).
ARC may be based upon your farm (individual) or area (county). If you choose individual ARC, all commodities on the farm must be under individual ARC. If you choose PLC or area ARC, you may then choose to enroll each commodity into the program you deem appropriate.
If you choose PLC, you may then add Supplemental Coverage Option (SCO) to your crop revenue insurance. This is basically the “shallow loss” coverage we’ve heard discussed for several years. If you choose ARC, you are not eligible for SCO. SCO will pay only if the county experiences a 14% loss. (county yield/revenue guarantee vs. actual county yield/revenue).
Conservation compliance is re-attached to purchasing crop insurance, but is forward-looking only. Past issues with conservation compliance will not affect participation in crop insurance.
The Adjusted Gross Income (AGI) test required for annual program participation sets a cap of $900,000 income for the previous three-year average. Other qualifiers previously associated with AGI have been eliminated. The payment limitation for ARC, PLC, and the loan rate program combined is $125,000 per individual.
There is currently no change to the “actively engaged” definition but USDA is required to review that within 180 days. Landowners have always been considered “actively engaged” as long as they own part or all of the crop. This definition is particularly important to our clientele and is being monitored by ASFMRA’s Washington DC representative.
More on PLC and ARC: PLC is similar to the old counter-cyclical program. Payment is a reference price based on 85% of base acres. In 2014, we will have the opportunity for a one-time yield update, which is 90% of the 2008-2012 average (you may plug in 75% of T-yield if less than 75% of T). The PLC payment will be the Reference Price less the 12-month national average marketing price x yield x 85% of base acres. The reference price for corn is $3.70 and $8.40 for soybeans. Let’s work the math: $3.70 – greater than $3.70 average price = no payment. $3.70 – $3.20 average price = 50c x 180 yield x 85% x 100 base acres would = $7,650 payment.
ARC area will utilize the Olympic average (drop the high and low) of the five most recent years area yield x the Olympic average five most recent years national marketing price (can plug the reference price if that’s higher in any given year). Actual farm revenue will equal the area yield x the national twelve-month average market price. The ARC area payment will be 86% of the benchmark revenue, which is actual revenue x 85% of base acres (not to exceed 10% of the benchmark revenue and payment limit).
ARC individual will work similarly except using your farm production history rather than the area figures (county averages), and instead of 85% of base, this will calculate on 65% of base. ARC also allows a yield plug of 70% of T instead of 75% as in PLC.
There is much to consider in the new program. This space allows only a brief review of the major points. Rules and regulations are still being written for implementation of the program, but now is the time to start understanding the main features.
President Obama released his 2015 budget request to Congress earlier this month. The annual request starts the appropriations cycle in Congress. The House and Senate Appropriations Committees will now start to hold hearings on the budget request. Secretary Vilsack testified last Friday before the House Agriculture Appropriations Subcommittee regarding the 2015 President’s Budget.
The President is proposing to close 250 county FSA offices in 2015 along with commensurate staff reductions. The proposal is opposed by the National Association of FSA County Office Employees (NASCOE) which noted that the new farm bill will require farmers to make complicated decisions and that the Internet-based applications that USDA has said would be available to farmers have not been implemented and therefore offices should not be closed.
The President’s request also included several crop insurance proposals which have been previously rejected by Congress and will most certainly be rejected again this year by the Appropriation and Agriculture Committees. The proposals would reduce farmer premium assistance, cut expected returns to the private companies delivering the program and reduce further administrative payments (A&O) made on behalf of farmers to agents and companies.
USDA Announces Farm Bill Listening Sessions
The U.S. Department of Agriculture announced a series of meetings to share information with stakeholders about the 2014 Farm Bill implementation process. A joint FSA/ RMA listening session is scheduled for March 27. You can find the listening session schedule here: http://www.usda.gov/wps/portal/usda/usdahome?contentid=2014/03/0035.xml
The Federal Register Notice for the joint FSA/RMA listening session can be found here: http://www.gpo.gov/fdsys/pkg/FR-2014-03-14/pdf/2014-05710.pdf starting at the bottom of the first page. Written comments are due by April 2 if you’d like to comment about how FSA or RMA should implement specific provisions of the farm bill.
House Introduces Bill Protecting Farmers Private Information
Congressman Crawford (R-AR) along with Representatives Costa (D-CA), Terry (R-NE), and McIntrye (D-NC) introduced a bill entitled the “Farmer Identity Protection Act” last week that would prohibit the Environmental Protection Agency (EPA) from releasing agricultural producers’ private information into the public domain. The legislation comes in response to EPA’s 2013 release of agricultural producers’ private information to environmental groups filing Freedom of Information Act (FOIA) requests. Congressman Crawford said EPA’s information leak included names, addresses, phone numbers, and GPS coordinates of more than 80,000 agricultural producers in 30 states, including Arkansas.
Rep. Roby Leaves House Ag Committee Replaced by Rep. McAllister
Representative Vance McAllister (R-LA) has joined the House Agriculture Committee, succeeding Representative Martha Roby (R-AL), who took a seat on the House Appropriations Committee. Congressman McAllister will serve on the General Farm Commodities and Risk Management; Conservation, Energy, and Forestry; and Department Operations, Oversight and Nutrition subcommittees.
EPA Water Rules Regulation Imminent?
The EPA is set to issue new regulations clarifying which bodies of water the agency must oversee under the Clean Water Act. There is no timetable for when the regulations will be issued, according to the report in The New York Times: http://www.nytimes.com/2014/03/13/us/politics/environmental-protection-agency-water-rules.html?smid=tw-share&_r=3
FAA releases fact sheet about Unmanned Aerial System regulations
There has been quite a lot about drones in the news recently and we will actually have a drone demo at the annual meeting in Tucson this fall (Oct 27 – Nov 1). This story from Farm Futures the FAA dispels myths about the regulations regarding these systems. Read more on the Farm Futures website: http://farmfutures.com/story-faa-busting-myths-unmanned-aerial-systems-17-109512
New USDA agriculture census report shows trends
By David Bennett - Delta Farm Press – The USDA has released a preliminary report on the 2012 Census of Agriculture. The full report will reach the public in May. The preliminary data provides “a snapshot of a strong rural America that has remained stable during difficult economic times,” said Tom Vilsack, Agriculture Secretary. Continue reading: http://deltafarmpress.com/government/new-usda-agriculture-census-report-shows-trends?NL=DFP-01&Issue=DFP-01_20140306_DFP-01_29&YM_RIDemail@example.com&YM_MID=1453144&sfvc4enews=42&cl=article_2
Wells Fargo lowers FHA credit scores to 600
By Pete Carey, San Jose Mercury News – A move by Wells Fargo Bank to lower the bar for certain government-backed mortgages is stirring hopes of homeownership among people with credit scores battered by the recession. Read more: http://www.mercurynews.com/business/ci_25200954/wells-fargo-lowers-credit-scores-fha-loans?utm_source=NEWZ%3A+Wells+Fargo+lowers+FICO+scores%2FDeadbeat+AMCs+coming%2FWho%27s+busy%3F&utm_campaign=at+1-31-12&utm_medium=email
New farm program made easy
Logan Hawkes – Western Farm Press - Hoping to avoid another federal government website embarrassment, USDA has rolled out a clean new web site that provides some excellent resources for understanding the way the new farm bill programs and options work. Continue reading on the Southwest Farm Press: http://southwestfarmpress.com/government/new-farm-program-made-easy?NL=SWFP-01&Issue=SWFP-01_20140314_SWFP-01_437&YM_RIDfirstname.lastname@example.org&YM_MID=1454831&sfvc4enews=42&cl=article_1