Farm Bill 2018 – It’s decision time

 

A year in the making, we finally have the field crop commodity section of the national farm bill program ready for producer participation. To help farmers navigate the best plan for their farm, Michigan State University Extension and the USDA Farm Service Agency (FSA) have teamed up to offer meetings throughout Michigan this winter.

 

A normal farm bill process would have had producers signing up for the 2019-year in March 2019 but because of the delay in implementation, farms will be signing up for the 2019 and 2020 crop year almost concurrently. This delay benefits farmers in that it does make the 2019 crop year decision much more informed and has a direct impact on your choice between the Agricultural Risk Coverage program (ARC) versus they Price Loss Coverage (PLC) program.

 

The ARC program provides revenue-based payments when farm revenue falls below a “Coverage Guarantee” level. While the PLC program provides price-based payments when prices are less than the “Reference Price” level and uses an individual farm’s PLC yields to determine the payment rate.

 

This five-year farm bill provides a one-time opportunity to update a farm’s PLC yields (to be used for the 2020-23 program years). Updates will be based on the farm’s yields for 2013-2017. Livestock producers will need to work with their local FSA office to estimate yields for 2013-17. If the updated yields are lower than a farms previous PLC yields, farms can stay with their previous yields. When choosing the PLC program for a particular crop, a few bushels yield increase in your farm’s PLC yields can make a significant difference if there is a payment made due to depressed prices.

 

Another change in this farm bill is that producers will be able to make a yearly choice between ARC and PLC (after the initial sign-ups for the 2019, 2020 year). The choice between ARC and PLC is made by each farm number and by crop base acres associated with each farm number. Current price and yield data would suggest that your decision between ARC and PLC may very well be different for different crops and farms.  Keep in mind that the 2018 Farm Bill makes payments based on the county where the farm is located, so you may need to check with your local FSA office if you have fields in more than one county.

 

In addition, a producer’s risk tolerance will factor into their choice of ARC vs. PLC, and what other crop insurance tools they may be using for their farm.

 

Roger Betz, MSU Farm Business Management educator, has developed a spreadsheet to help producers make the decision between ARC and PLC by crop and farm. The decision tool has built in information from each county and helps farmers make decisions for each individual farm for corn, wheat, and soybeans. The ARC/PLC calculator can be found at https://www.canr.msu.edu/farm_management/

 

Final decisions on ARC vs. PLC must be completed by March 15, 2020, but producers should sign-up, update their yields, and make their initial election decisions now. Farmers will want to visit their local USDA Farm Service Agency (FSA) to sign up their farms that have historically produced corn, wheat, soybeans, other oilseed crops, oats, barley, and grain sorghum and have an established base for these crops.

 

You can change your decision choice until March 15. If you miss this date, you will not be able to enroll and will not receive any potential payments for the 2019 crop year and will be defaulted to the previous 2014 decision for the 2020 year.

 

MSU Extension has partnered with local FSA offices to offer multiple Farm Bill Meetings across the Michigan during December 2019 and January 2020.