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ARC? PLC? Choose wisely

By Staff | Nov 26, 2014

“mailto:kersh@farm-news.com”>kersh@farm-news.com

FORT DODGE – It’s complicated. It’ll take several hours of decision-making and visits to a county Farm Service Agency office. But it’s not impossible for farmers to choose which farm bill program they should choose.

A pair of speakers – Carolyn Leners, director of the Webster County FSA office, and Kelvin Leibold, an Iowa State University farm management specialist – addressed these issues Nov. 21 at the Webster County Fairgrounds with 160 people in attendance to give farmers an initial look at what lies ahead of them in enrolling into one of two farm programs.

Leners and Leibold told farmers repeatedly they need to start the extensive process of figuring their course of actions right away.

And whichever program they enroll in, they’re locked in for the life of the farm bill – until 2018, or longer if it’s extended.

There are two programs – Ag Risk Coverage, which is yield protection; and Price List Coverage, which is revenue protection.

“You’ll have to decide if you are trying to enhance revenue (under PLC) or manage risk (under ARC),” Leibold said.

Leibold called the process complicated because there are considerations in this farm bill that were not in the 2008 program and programs that were stripped away when the 2014 program was hammered together.

Updates

Leners told farmers the first of three steps they’ll need to take, will require repeated visits to an FSA office.

-Farm News photo by Larry Kershner KELVIN LEIBOLD, an Iowa State University farm management specialist, based in Clarion, offers an overview of the 2014 farm bill for 160 farmers and ag financiers on Nov. 21 at the Webster County Fairgrounds.

Producers have the option to update their base acres and counter-cyclical yields, the first time they could do this since 2002. The period for doing this opened on Nov. 17 and will close on Feb. 27, 2015.

Any updates require land owners to sign off on them, she said. This is because if FSA spot-checks any farm for compliance, it will go to the owner, not the renter for the necessary records.

Although only one owner’s signature will be required, she said renters should let all owners know what is happening. If there is a dispute, she said, there will be no payments issued on a disputed parcel for 2014, if a payment is required.

She said her office is willing to help farmers with the process.

However, Leibold said farmers should not wait until Feb. 26 to go in.

“It will be a long wait,” he said, “and there won’t be any help available. “That’s because (FSA) has fewer people to help than during the 2008 farm bill.”

Those who fail to adjust acres or yields by the deadline will remain the same.

“The yield update is a no-brainer,” Leibold said. “If you can get a bigger yield, do it.

“But the base update is different. The strategy is based on if you’re enhancing revenue or managing risk.”

Election

One month after the base acres and yields are adjusted, farmers will be electing either the ARC or PLC programs. Land owners will have no say in this program. The signature will be the producer who carries the risk of producing the crop, Leners said. The deadline is March 31, 2015.

Within ARC are two options. Farmers can choose revenue protection based on their county’s average yield (ARC-CO); or revenue protection based on their individual farm’s yield (ARC-IC).

Those who elect ARC-CO can split their covered commodities, such as corn and soybeans, some in ARC-CO and others in PLC. However, those who choose ARC-IC, covered commodity will be in that program.

Leibold said this factor will be an issue for the duration of the farm bill when it comes to land rents.

“The question that will be asked is, ‘Which program is it in?’ and that may make a difference in how much I’m willing to pay for rent,” he said.

FAVs

Fruit and vegetable growers can elect ARC or PLC programs, Leibold said. Those who plant at least 15 percent of their base acres in FAVs can elect PLC or ARC-CO.

Those who plant 35 percent or more of their base acres,may elect ARC-IC.

Enrollment

This will be the simplest step, Leners said, and will be accomplished by summer 2015. She said the first time will be for the 2014 and 2015 program years. Afterward, farmers will enroll annually for the next growing season.

Payment caps will also be part of farm bill considerations, Leners said.

If government payments are generated, Leners said, they will be capped at $125,000. If the entity has an adjusted gross income of more than $900,000, there will be no payments, she said.

However, if the farm has more than one owner and is not incorporated, but farmed in a partnership, each partner is capped at $125,000.

Both speakers encouraged farmers to start talking with their partners, land owners and FSA as soon as possible.

SIDEBAR

Online resources for choosing ARC, PLC

Farmers can get help in getting more information about the farm bill programs they’ll be in until 2018, and online calculators for deciding whether they’ll opt for managing risk (ARC) or enhancing income (PLC).

These include:

  • Ag Manager, developed by Kansas State University at www.agmanager.info/policy/commodity/2012/default.asp.

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