Landowners can reallocate crop basesThe 2014 Agricultural Act offers landowners the option to reallocate base acres and update base yields. Base acre reallocation is by individual farm units, and updating program yields is crop by crop on individual farm units.
By: NDSU Agriculture Communication,
The 2014 Agricultural Act offers landowners the option to reallocate base acres and update base yields. Base acre reallocation is by individual farm units, and updating program yields is crop by crop on individual farm units.
Landowners may reallocate bases on any or all of their farm units. But for any farm unit the landowner chooses to reallocate, all crop bases on that farm must be reallocated.
“The key word is reallocate, not update, as was an option with the 2002 farm bill,” says Dwight Aakre, North Dakota State University Extension Service farm management specialist. “Reallocation means a landowner can change the mix of crop bases on the farm but cannot increase total base acres. Reallocation will be determined by the acreage of each covered commodity planted and prevented planted on the farm from 2009 through 2012.”
A percentage for each covered commodity is determined as a percent of the total covered commodities produced during the four years. That percentage is applied to the 2013 total base acres to determine the new crop bases.
Landowners also have the option to update program yields. Updated yields will be calculated on production from 2008 through 2012. Yields for each year during 2008 through 2012 that a covered commodity was produced will be averaged. Years when the crop was not planted will be excluded. If the new yield exceeds the 2013 counter-cyclical yield, the landowner has the option to accept the higher yield. Landowners may update some crop yields and leave others unchanged. Each farm unit is treated individually.
“Program yields are used in determining the size of the payment for farms enrolled in the Price Loss Coverage option,” Aakre says. “PLC payments are determined by multiplying base acres times 85 percent times program yield times the payment rate per bushel or hundredweight. Updated yields will remain with the farm and be used to compute any PLC payments throughout the life of the 2014 farm bill.”
Actual yields are included in the calculation for determining benchmark revenue for farms that select the Agricultural Risk Coverage farm option. Higher yields result in a higher benchmark, which increases the chance of a payment.
But with the ARC farm option, the benchmark yield is a rolling average.
Actual yields must be reported to the Farm Service Agency every year, and a new five-year Olympic average is calculated.
Olympic average refers to dropping the highest and lowest prices and yields and averaging the remaining values. The revenue guarantee is 86 percent of this calculation.
Base acres factor into calculating the payment for all three program options.
The ARC county option and PLC use a factor of 85 percent of the base acres by crop in calculating the total payment. The ARC farm option uses total planted acres of all covered commodities to calculate the payment per acre and then multiplies this payment rate by 65 percent of total base acres on the farm to calculate the total payment.
Base reallocation and yield updates must be completed this year. The FSA will provide notification to landowners that will include the base and yield information of record as of Oct. 1, 2013. It will be up to landowners to decide whether any reallocating or updating is to their advantage.