Across the country, agricultural producers are beginning the pencil pushing process that will determine which commodity programs they will sign up for under the 2018 farm bill, also known as the Agriculture Improvement Act of 2018.
According to Dr. Brad Lubben, extension associate professor and policy specialist at the University of Nebraska-Lincoln, commodity program signup technically started in September, but March of 2020 will be the deadline.
While the program acronyms of ARC (Agriculture Risk Coverage) and PLC (Price Loss Coverage) are the same as in the previous farm bill, key factors have changed.
“The market environment in which we are making these decisions is much different than it was in 2014,” Lubben said.
In 2014, the agricultural market was coming off of high prices. Because the ARC is tied to the moving average yield and moving average price, it provided farmers good protection at that time. But the PLC is already paying in 2019, Lubben pointed out.
“So the scenario has basically flipped because of low prices and the current trade outlook,” he said.
Price level concerns about price levels will undoubtedly impact producers’ decisions.
“USDA’s baseline for the life of this farm bill was released in late October and it’s pretty flat. We aren’t going to be able to predict the next market move and certainly not the next baseline,” Lubben said.
One of the major changes from 2014 to 2019 is in the previous farm bill, producers had to make a one-time decision for the safety net program they would use for five years. Under the current bill, the decision becomes an annual one after the initial 2019-20 crop year enrollment.
“While we don’t know exactly where production numbers and price levels will come in, this year is essentially done,” said Lubben. “Recognizing that there are substantial losses in a number of areas due to this year’s flooding and wet weather, it is hard to imagine there will be a production or market shock.”
Other changes in the 2019 bill include:
1) A yield update opportunity with limits for producers. Producers can take a look at their 2013-17 farm program yields and history and take advantage of the update if it pencils out.
2) Under PLC producers can increase the reference price, if market prices are high enough. However, Lubben notes, “We can’t get commodity prices high enough fast enough in the life of this farm bill to have this kick in.”
3) Under ARC at the county level and individual level, producers need to be aware that their yield history will now be a trend-adjusted yield.
“This should give us a benchmark yield of what average actual production would be. By all calculations ARC doesn’t kick in as quickly as PLC for corn, grain sorghum and wheat. With soybeans the difference isn’t as clear,” he said.
4) Another option is ARC-IC, which is a farm level safety net with a revenue guarantee tied to farm level yield histories, current plantings and the current mix of planted crops. While it pays on fewer acres, the mathematics are more complex, said Lubben, adding that payments are a function of what you actually grow. Knowing how a farm did in 2019, if someone suffered tremendous losses, ARC-IC might kick in. All acres in ARC-IC by unit can all be bundled together, but this further complicates the ending analysis.
Those with complete losses on a crop this year, might have no revenue to count against their guarantee, so payments could be big this year. But Lubben cautions this is only if on the 100% prevent plant there is no revenue.
“If any part got planted, it would only be a function of how the planted acres did,” he said. “If, however, the planted acres had a loss then maybe the ARC program pays out.”
While ARC was not a popular choice in 2014 because of the five-year time commitment, ARC and ARC-IC may be an important choice for producers this time, Lubben said.
Within the farm portfolio, this time there are a number of new buzzwords, Lubben said.
“Hemp is no longer illegal in the federal regulations. The federal government published the hemp rule in late October, so now it is up to the states to publish their rules and requirements in conjunction with the federal rule,” he said.
Because Nebraska chose to operate under the pilot rule this past year, the number of producers was limited and in order for more producers to become eligible growers the state now must work on publishing their own rules, the extension specialist said.
“For those that did get to produce this year, we have production, but we’re not sure where we’re going to market this crop,” he said.
Other states have followed different options regarding hemp, and producers need to check with their respective agriculture departments to see if hemp production will be allowed. The new federal rules for the first time make it possible for hemp to be covered under crop insurance and federal loan programs.
Another buzzword is rural broadband, which Lubben said was referenced in all of the rural development debates. Now it comes down to a mix of agencies and how the Federal Communications Commission plans to administer broadband development.
Finally, the new bill authorized initial funding for an animal vaccine bank that should help the country prepare for dealing with an animal disease outbreak.
“Such readiness improves our ability to respond and avoid a catastrophe,” Lubben said.
Under the conservation title of the farm bill, one of the main changes is an increase in the CRP (Conservation Reserve Program) cap from 24 to 27 million acres. This makes room for new CRP enrollment for the first time since 2016. But the increase in acres comes with a caveat as there will be smaller rental payments for those enrolling.
“Under the working lands portion of the CRP, spending will peak out in 2019 and for the first time in 30 years will start a downward trend,” Lubben said. “We didn’t have new money added when the farm bill was developed.”
As with any farm bill there is much to learn and digest, Lubben said. A series of information meetings will start Nov. 18 and run through mid-December at more than 30 locations across Nebraska.
“The meetings were developed through collaboration with the Farm Service Agency (FSA), Extension and Natural Resource and Conservation Service personnel. The meetings will include program details, the economics of commodity program decisions and offer suggested tools producers can use to analyze their decisions.
Lubben encourages producers to attend and to register online so program administrators can adequately plan for enough materials to distribute and be setup for the right number of attendees.
For those who would like to get a start on their Farm Bill 101, Lubben suggests checking out the website farmbill.unl.edu as well as a series of decision tools that are available as a link off of the FSA website: fsa.usda.gov.
Freelance journalist Barb Bierman Batie farms row crops with her Platte Valley Farmer, Don Batie, northeast of Lexington.. She can be reached at email@example.com.