Farm management specialist: 'No right answer' between PLC, ARC
GRAND FORKS, N.D. -- Dwight Aakre has analyzed many federal farm bills in his career. But even the veteran North Dakota State University Extension Service farm management specialist isn't sure which of the two safety-net options created by the 20...
GRAND FORKS, N.D. -- Dwight Aakre has analyzed many federal farm bills in his career. But even the veteran North Dakota State University Extension Service farm management specialist isn't sure which of the two safety-net options created by the 2014 farm bill is the better choice for area farmers.
"This is a gambling bill. There's no right answers," he said. "We have no idea whether PLC or ARC is going to be the better choice."
But he is sure of one thing: Producers need to look hard at reallocating their base acres.
Aakre was among the speakers at a farm bill informational meeting Oct. 7 in Grand Forks, N.D. The meeting was led by officials with NDSU extension and the North Dakota state office of the Farm Service Agency, an arm of the U.S. Department of Agriculture.
Other speakers were Aaron Krauter, executive director of the North Dakota FSA; Dale Ihry and Bryan Olschlager, FSA program directors in North Dakota; and Andrew Swenson, another NDSU Extension Service farm management specialist who's also studied the farm bill.
Krauter noted that the farm bill passed by Congress and signed by President Barack Obama on Feb. 7 eliminated direct payments to producers and created "two cornerstones" in its crop safety net: Agriculture Risk Coverage and Price Loss Coverage.
"This is one of the largest policy reforms we've seen in decades," Krauter said.
ARC protects against falling revenue. PLC provides payments when crop prices fall. Farmers are locked in until 2018 once they've decided between the two. They'll have until early spring of 2015 to make their decision.
To complicate matters, ARC comes in two versions: the county level and individual producer/farm level. In fact, informational material at the Grand Forks meeting referred to "three new" programs: PLC, ARC-County and ARC-Individual.
Deciding among the options won't be easy, and producers won't know for sure for five years whether they made the right decision, Aakre said.
"After the game is over, you'll know which one was better," he said.
The choice between ARC and PLC must be made between Nov. 17 and March 31. Aakre recommended that farmers wait until February or even March to decide, which could give them more time to collect information and make the best choice.
Farmers need to work with their local FSA office.
Ihry said FSA employees in North Dakota have been trained on the new farm bill.
"We think we're ready to go," he said.
Yields, base acres
Krauter and other speakers stressed that the new farm bill gives farmers the opportunity to update their crop yields. That's important -- crop yields help determine the size of potential farm program payments, and updating them could mean more money for farmers.
"Yield update is a no-brainer. Everyone should go through that," Aakre said.
The new farm bill also allows farmers to reallocate their base acres. The decision of whether to reallocate could be just as important as whether to select ARC or PLC, Aakre says.
Base acres refers to the number of acres of wheat, feed grains, upland cotton, rice, oilseeds, pulse crops and peanuts eligible to participate in commodity programs.
The new farm bill doesn't allow farmers to increase their number of base acres. Rather, they can reallocate their existing base acres to other crops, using their 2009 to 2012 planted acres to create a new base.
Again, that's important -- wheat, which currently accounts for a big chunk of base acres of many North Dakota farms, has become less popular since 2009, with corn and soybeans becoming more common.
As Aakre noted, reallocating base acres might make more of farmers' crops eligible for farm programs.
But farmers can't be certain what they'll actually plant in the 2015, 2016, 2017 and 2018 crop seasons; prices and weather will influence those decisions. So, reallocating base acres now, based on what happened in 2009 to 2012, could work against farmers in 2015 to 2018, Aakre said.
More sources of help
Swenson talked about an online spreadsheet he developed that can help farmers make decisions about base reallocations, yield updates and ARC and PLC. For more information, www.agndsu.edu/farmmanagement/farm-bill .
The Grand Forks meeting was the first in a series of farm bill sessions led by the North Dakota FSA and NDSU Extension. Here are the times and locations of the remaining meetings:
•Oct. 8: 8 to 10 a.m., Devils Lake Memorial Building.
•Oct. 8: 1 to 3 p.m., Minot Research Extension Center.
•Oct. 9: 8 to 10 a.m., Williston Research Extension Center.
•Oct. 9: 8 to 10 a.m., Dickinson State University, Ag Auditorium, Room 104.
•Oct. 15: 8 to 10 a.m., Bismarck Ramada, Assembly Hall.
•Oct. 15: 1 to 3 p.m., Jamestown, Farmers Union Conference Room.
•Oct. 16: 8 to 10 a.m., Lisbon Ransom City Fairgrounds, West Wing-Expo building.
•Oct. 17: 8 to 10 a.m. Fargo Ramada Plaza & Suites, Bach Room.