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Published May 02, 2014, 03:25 PM

USDA will wait to release specifics on farm bill commodity title

The U.S. Department of Agriculture isn’t likely to announce the fine points of the farm bill commodity title any time soon, two key congressional staffers said. Because the payment options are decoupled from planting decisions, the programs farmers choose won’t have bearing for 2014 planting. Bart Fischer, chief economist for the Republican-led U.S. House Agriculture Committee, and Matt Schertz, senior professional staff member, spoke to about 150 people in a two-hour “farm bill implementation seminar” in Fargo, N.D., on May 2.

By: Mikkel Pates, Agweek

FARGO, N.D. — The U.S. Department of Agriculture isn’t likely to announce the fine points of the farm bill commodity title any time soon, two key congressional staffers said.

Because the payment options are decoupled from planting decisions, the programs farmers choose won’t have bearing for 2014 planting. Bart Fischer, chief economist for the Republican-led U.S. House Agriculture Committee, and Matt Schertz, senior professional staff member, spoke to about 150 people in a two-hour “farm bill implementation seminar” in Fargo, N.D., on May 2. The seminar was organized by U.S. Rep. Kevin Cramer, R-N.D.

The two largely discussed the evolution of the farm bill and spent the last 20 minutes of the meeting discussing implementation. Cramer said farmers and their advisers need to know how to make decisions with multi-year consequences under the farm bill, which took four years to create and was signed into law on Feb. 7.

Late fall sign-up

Fischer started his presentation by saying their comments were “on background,” and not to be directly quoted by the invited news media.

Fischer and Schertz said they’ve been told farmers can expect a late fall sign-up on commodity titles that could spill into the 2015 calendar year.

Dwight Aakre, a North Dakota State University Extension Service agricultural economist, told Agweek some farmers find it hard to believe that payment options and planting are decoupled.

“Farmers can go ahead and farm the best way they know how,” Aakre said. “The farm bill is more about how they generate the federal part of their income, which recently has been smaller than most people think.”

North Dakota FSA Director Aaron Krauter did not speak at the meeting but confirmed to Agweek that while the Livestock Indemnity Program and other aspects of the farm bill were implemented right away, U.S. Agriculture Secretary Tom Vilsack has directed FSA employees not to make presentations on the commodity title until details are ironed out, and Fischer and Schertz aren’t directly involved in that.

Dale Ihry, a North Dakota FSA state program specialist who is among five officials on a national committee to set final rules for the commodity title of the farm bill, attended the meeting but did not speak.

The programs

Fischer and Schertz explained the payments are determined on base acres, not planted acres. The primary decision for farmers is whether to enroll in the farm bill’s Agricultural Risk Coverage or Price Loss Coverage — the two commodity options.

Fischer said the bill includes $3 million for land grant universities to develop computerized spread sheets to help farmers choose a program as they attempt to optimize federal payments over the five-year time period. NDSU and other universities have these tools, but Fischer said they’ll have to be updated with more information that USDA hasn’t yet released.

“The decision (ARC or PLC) is based, crop-by-crop, on individual FSA farm numbers — a choice within an individual’s crop base,” Aakre said. “There are a lot of interactions.”

Aakre said there are many unknowns. “In general, it looks like ARC might be the preferred option for corn-based acres. PLC looks favorable for barley and most of the minor oilseeds. Other crops — including soybeans, wheat and pulse crops — are kind of a toss-up.”

If farmers choose the ARC option, they must also choose either a county- or a farm-based payment calculation. That isn’t a stipulation under the PLC option.

“Farmers to date have generally favored a price protection program, even though they often say different,” Aakre explained.

The ARC program is a revenue-based program, similar to the old ACRE program in the 2008 farm bill, except ACRE was more tied to what the farmer planted.

Fischer said some of the advisers have been too quick to advise one or the other. Jeff Riedesel, of Central Insurance Agency in Carrington, N.D., said the dizzying array of choices for the programs will make them hard to explain to absentee landowners, who must sign the documents unless farm operators acquire power-of-attorney.

Other factors

Another important decision for farmers will be base reallocations — an opportunity to change the mix of base acres without changing the total base.

Fischer and Schertz also described the Supplemental Coverage Option — a crop insurance program that for the first time in history can layer over standard crop insurance. Farmers can purchase a policy from an insurance agent for the 2015 crop year, with the standard March 15 deadline. The Risk Management Agency is still working out that program for next year.

Aakre said in the past few farm bills, 96 to 98 percent of North Dakota gross farm income came from the marketplace — not from farm bill programs. If farmers decide on ARC or PLC for a five-year period, Aakre said, it might change their income by 1 or 2 percent.

The crop insurance payments have sometimes been substantial. Farmers pay premiums for them, but the premiums are subsidized.

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