CC362 Integrated Farm Management Program Option

Transcription

1 University of Nebraska - Lincoln DigitalCommons@University of Nebraska - Lincoln Historical Materials from University of Nebraska- Lincoln Extension Extension May 04 CC6 Integrated Farm Management Program Option R. T. Clark Follow this and additional works at: Clark, R. T., "CC6 Integrated Farm Management Program Option" (04). Historical Materials from University of Nebraska-Lincoln Extension This Article is brought to you for free and open access by the Extension at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Historical Materials from University of Nebraska-Lincoln Extension by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln.

2 Nebraska Cooperative Extension CC6 Integrated Farm Manage!l~nt As~ A Program Option L! N CO LN L. _. A RI~S AUG 8 99 The Integrated Farm Management Program Option (IFM) is one of the new initiatives in the 990 Food, Agriculture, Conservation and Trade Act (FACTA). The stated purpose of the IFM option is... "to assist producers of agricultural commodities in adopting integrated, multiyear, site-spee':ific farm management plans by reducing farm program barriers to resource stewardship practices and systems." (U.S. Congress, p. 60). One of the objectives is to not reduce farm program payments of participants in the IFM as a result of planting a resource conserving crop as part of a rotation on payment acres. The IFM seems to be a response to those who argue that the farm program discourages farmers from rotating crops - especially crops that conserve or build soil. The acreage goal for IFM has been a source of confusion in the program. According to the Conference Report on this act, the conferees adopted the wording from the Senate bill (S.80) which stated that the Secretary of Agriculture was directed to enroll "not less than three and no more than five million acres during each crop year from " (p. 95). The wording in the final law, however, was not so clear. FACT A states that "no more than,000,000, nor more than 5,000,000 shall be enrolled in the years " This rather confusing statement has been interpreted by USDA to mean to 5 million acres for the five years in total (USDA, p. 665). One million acres may be enrolled during the first year Each state was allocated a maximum level according to the percent of the national cropland in the state (ASCS, Amendment 6 to 5-PA). Nebraska received authority to enroll up to 5,64 acres in 99 with no more than 000 acres in any county. If requests had exceeded the state allocation, each county request would have been proportionately reduced. For 99 fewer than 900 acres were actually enrolled in the state. The purposes of this circular are to explain the IFM program and to compare it to another option, the 0-9 program. The requirements and definitions for IFM are explained first, followed by the comparison to 0-9. The comparison is aided by hypothetical examples which demonstrate' how an IFM plan could work. R. T. Clark WCREC, University of Nebraska, North Platte STACi\S Program Requirements A farmer must indicate participation in IFM during the sign-up period for the standard commodity programs. Enrollment in IFM requires the signing of a contract for a minimum of three years, but at producer discretion can be for as long as five years. The contract enrolls all crop acreage bases (CAB's) on the farm. IFM requires that on the average over the contract life at least 0 percent of all CAB's on the farm must be devoted to a resource conserving crop (RCC). For example, if a farm has 00 acres of wheat base and 00 acres of corn base, then acres devoted to a RCC must average a minimum of 0 acres of the wheat base and 0 acres of the corn base per year for the contract life. By signing the contract, the IFM participant is also agreeing to comply with any annual acreage reduction program in effect. Since the producer is enrolling all his or her CAB, the entire CAB enrolled counts towards the acreage limits discussed above. In other words, the 5,64 acres for Nebraska in 99 is for crop acreage base - not resource conserving crops. If all possible acres had been enrolled and if each participant had enrolled the minimum (0 percent), Nebraska could have enrolled 0,59 acres of RCC's in 99. A farmer also is required to develop and apply an integrated farm management plan. The plan must be approved by the Soil Conservation Service (SCS). Resource Conserving Crop Resource conserving crops are defined to be: () legumes grown for forage or green manure crops, but not including any bean crop from which seeds are harvested (Conference Report also suggests that legumes should not include peas and lentils); () legume and perennial grass mixtures where the grass is one 'References used for this section are: U.S. Congress; ASCS, Amendment 6 to 5-PA. Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 0, 94, in cooperation with the U.S. Department of Agriculture. akenneth R. Bolen, Director of Cooperative Extension, University of Nebraska, Institute of Agriculture and Natural Resources. The Cooperative Extension SeVice provides information and educational programs to all people without regard to race, color, national origin, sex or handicap. IJIIIJW

3 commonly used for haying or grazing; () legume-small grain mixtures; (4) legume-small grain-grass mixtures; and (5) alternative crops (no alternative crops have been approved to date). In the previous definitions, small grain does not include malting barley or wheat, except for wheat interplanted with other small grain crops for nonhuman consumption (ASCS, SPA, pp ). A RCC crop could be an existing crop already on the farm if the crop meets RCC guidelines. For example, a farm that already had alfalfa established could use the alfalfa as all or part of its RCC depending on acreage requirements. If that alfalfa had been used as conservation use for planted and considered planted (CU for P and CP) to protect part of the farm's CAB in prior years, then that traditionally underplanted acreage could not be used as an RCC for pay or for pay with the progrnmcrop. RCC on Payment Acres A resource conserving crop on payment acres may earn the same deficiency payment (if any) that would be earnedbytheprogramcrop it replaces.lf an RCConpay acres is grazed during the five month nongrazing and nonhaying period, the deficiency payment will not be earned, with one exception. Any RCC containing a small grain that is harvested for grain can be hayed or grazed after the small grain is harvested. Such grazing/haying (after harvest of the small grain) may take place during the five month nonhaying and nongrazing period. RCC on Reduced Acres (ASCS- Amendment 6 to 5-PA) The RCC can be planted on ACR acres. Fifty percent of the RCC's designated as ACR can be hayed or grazed during the entire year. The other 50 percent may only be grazed or hayed outside the five-month nonhaying and nongrazing period. The five month nonhaying and nongrazing period is between April and August in eastern and north central Nebraska, April 5 and September 5 in 7 Southwestern counties and May and September 0 in the Panhandle region of the state. Small grains other than barley (including malting barley), oats and wheat, that are part of a RCC mixture designated as ACR may be harvested for grain with no restrictions as to quantity of the ACR so designated. Bases and Yield Protection Base acres planted to a RCC as a part of a resourceconserving crop rotation shall be credited as CU for P and CP. By so doing, the crop acreage base (CAB) on the farm cannot be changed by participating in the integrated farm management option. Payment yields for the farm program cannot be reduced as a result of planting a RCC on base acres. Traditionally underplanted acreage cannot be counted as a RCC and used for receiving program payments. Traditionally underplanted acreage is the difference (in a given year) between the producer's CAB and the sum of the acreage planted to the program crop, approved as prevented planted (due to conditions beyond producers' control, e.g. flooding) and the part of the CAB subject to an acreage limitation program (ACR). In the case of a 0-9 participant, traditionally underplanted acres would be eight percent of the producer's permitted acreage. The exact figure used for the life of the IFM contract will be based on a three-year average-the most recent three years for nonrotations and rotations unless rotation is all in a program crop one year and all out the next, then the previous three years corresponding to the latest year that the rotation was all in the program crop. Advantages of IFM A producer who would like to bring more resource conserving crops into a rotation may be able to do so without sacrificing potential for deficiency payments. This seems to be primarily true for producers who have CAB's for most or all of their cropland acres. Producers with many "extra" or"free" acres (cropland without base) should be able to bring RCC's into their rotations even without IFM or the 0-9 option. Another advantage may be the technical assistance available for developing an I FM plan. The plan may help the producer better integrate resource conserving crops into his or her production system. Disadvantages of IFM One-possible disadvantage relates to the requirement that a producer comply with any acreage reduction program (ARP) in place during the life of the contract. If a producer signs a three-year IFM contract, he or she is locked into participating in ARP for three years. If conditions (e.g., crop prices, the farm program, personal goals) change so that it would be to the producer's advantage to stay out of the acreage reduction program, that producer could not stay out until the IFM contract expires. Some may consider the additional paperwork and intrusion into their operations an additional disadvantage. The main intrusion would be the IFM plan that must be followed to comply with the contract. If the program proves popular, the national and state acreage limitations may be additional disadvantages. - -

4 IFM Compared to 0-9 Given the limited availability of IFM acres, some producers may not be able to enroll. If these producers believe there are advantages to RCC's in their rotation, they may want to consider the 0-9 option. It does permit a producer to so some things in a mannerverysimilarto IFM. The 0-9 option will have a minimum of eight percent fewer potential payment acres than IFM. But payment acres under 0-9 will have a minimum guaranteed deficiency payment based on the USDA's projected deficiency payment. For 99, that minimum deficiency payment will be $0.58/bu for corn, $.47/bu for wheat (unless the winter wheat option is chosen, then the guarantee will be $.40), $0.56/bu for sorghum, $0.5/bu for oats, and $0.47/bu for barley. Payment acres devoted to RCC's under IFM will receive deficiency payments just as if they had been planted to the specific program crop. Of course, these deficiency payments depend on market prices. If the average market prices exceed the target price, then no deficiency payment will be earned. Flexibility for haying/grazing and harvesting of grain is different between IFM and 0-9. Table shows the specific comparisons. In general, the IFM has more flexibility for haying/grazing than does the 0-9 option. The haying/grazing of RCC's is quite flexible even when eligible for deficiency payments. A major reason for the greater flexibility is that grain in a RCC on pay acres can be harvested anytime during the year. After the grain is harvested, the RCC can be hayed/grazed anytime. Grain cannot be harvested on CU for pay. The CU for pay may be hayed/grazed only after the five month exclusion period. Conservation use (CU) for P and CP (non-payment) is a program category for cropland that is utilized to maintain bases. It can be hayed and grazed year around. Small grains that are to be harvested for grain are not eligible as CU, so planting oats as a nurse crop that would be harvested for grain along with establishing alfalfa is not permitted. Oats (or another small grain) could be planted and destroyed prior to grain formation and used as cover for planting alfalfa. This latter combination could be counted as CU for P and CP. Examples of I FM and 0-9 for Maximizing Haying and Grazing Tables -9 present two alternative situations for establishing alfalfa on 00 acres of cropland. The first situation (tables -5) shows possible scenarios when the farm has CAB for all cropland acres. The second (tables 6-9) compares establishing alfalfa when threefourths (50 acres) of the cropland has base. In both cases, it was assumed the producer was not producing alfalfa prior to entering either IFM or 0-9. Both examples assumed that the goal was to establish 80 acres of alfalfa with a four-year stand life. Reestablishment of the first year alfalfa acres began in the fifth year. Another assumed goal in the examples was to permit year-around haying/grazing of as many acres as possible while also maintaining deficiency payment opportunities on as many acres as feasible. Maintaining haying/grazing potential was assumed to take priority over deficiency payments if maintaining both was not feasible. It was also assumed that the producer has not traditionally underplanted his/her CAB in prior years. An example of traditional underplanting would be a producer who planted alfalfa in his/her rotation prior to IFM and used CAB acres to do so. Suppose the producer had 00 acres of corn CAB. During 988, 989, and 990 she/he used 0 acres of the CAB for alfalfa. The CAB was maintained by declaring the 0 acres, CU for P and Table. Comparison of Haying and Grazing Restrictions for Resource Conserving Crops and Conservation Use Acres. IFM 0-9 cu RCC for RCC RCC cu cu for P & CfXl pay forp& CP onacr for pay forb% Hay/graze Anytime No!Ves Yes 50% No No Yes Hay/graze after 5-month period Yes Yes Yes Yes Yes Yes Hay/graze after small grain harvest Yes Yes 50% No No Yes Harvest for grain? Yes Yes Yes/No 4 No No No May be hayed/grazed anytime, but operator will not receive any deficiency payment. Malting barley and wheat may not be used as part of a RCC except wheat interplanted with other small grain crops for nonhuman consumption. Small grains are not considered a conserving use (CU) crop unless destroyed without benefit from grain. Wheat, barley, and oats may not be harvested, but other small grains can be harvested. - -

5 CP. Assuming the ACR was 0 percent in those three years, the producer's CAB was used as follows: 0 acres ACR, 0 acres alfalfa for P and CP, and 80 acres of corn for pay. That producer traditionally underplanted 0 acres. The acres available for payment under an I FM contract would be reduced by 0 acres - the average amount traditionally underplanted. Forage sorghum and/or grass were arbitrarily shown on ACR for all options in the following examples. The sorghum could be hayed or grazed after the five-month exclusion period. If the grass mixed with a legume is an RCC in an IFM plan, then 50 percent could be hayed/ grazed anytime. The other 50 percent could only be hayed/grazed outside the five-month exclusion period. Producers can make other choices for the ACR, including leaving crop residue as the cover. ~ For the second alternative (Tables 6-9), it was assumed that part oft he producer's goal was to maintain as many acres of soybeans in the rotation as feasible without sacrificing the potential for corn deficiency payments: The examples do not imply that the depicted rotations will maximize profitability. The answer to that will depend on operating costs, yields and prices of the various crops. The examples are intended only to explain IFM and to compare it to 0-9 for achieving specific goals. If a producer plants a RCC for a green manure crop or for haying/grazing after the five month exclusion period, then maximum and actual payment acres should be the same within each program, i.e. IFM and 0-9. The green manure crop or the crop for haying/grazing after the five-month exclusion period could be a RCC or CU for pay since haying or grazing the crop anytime would not be important. Maximum pay acres would still be different between the two programs. The 0-9 program would have eight percent fewer acres available for pay, but at some guaranteed minimum deficiency payment. Conclusions Comparisons of table to 5 and table 7 to 9 show similar patterns between IFM and 0-9. In both examples it was not possible to maintain maximum payment acres under either program. Payment acres under IFM, however, were always greater than 0-9, but 0-9 payments are guaranteed at some minimum. Maximum payment acres could not be maintained because of the goal to hay/graze as much of the forage crop as possible at anytime. The differences between the maximum and actual pay acres for each year in both examples is the same for I FM and 0-9. The IFM program does provide more haying/grazing flexibility. Total acres that can be hayed/grazed are larger under 0-9 (because pay acres are less), but the acres that can only be hayed or grazed after the fivemonth exclusion are also much larger. The acres that can be hayed/grazed after oat harvest provide more flexibility than those that must wait until after the fivemonth exclusion. Combining the acres that can be hayed/grazed anytime and after oat harvest provides I FM with several more acres per year of grazing/haying flexibility compared to 0-9. A producer who would like flexibility, base protection, and protection of some deficiency payment without the to 5 year contractual commitment can achieve at least part of her or his goals with 0-9. While IFM may make achieving those goals a bit easier, 0-9 is also quite flexible. - 4-

6 Table. Example Integrated Farm Management Program Option- 00 Acre Farm with Full Base- Assume goal is to establish 80 acres of alfalfa over a 5-year contract. ACR Crops By Farm Program Category Acres Forage Sorghum Legume/grass (RCC) NFA (normal flex acres} RCC Corn For Pay (Oats/Alfalfa) t P & CP (Aifalfa) Pay Acres Corn Total Base ACR is 7.5% for 99 and assumed to be 0% for other years. Could be placed into a qualifying RCC thus expanding year around use; however, example using both shows flexibility. NFA does not have to be 0 acres as long as the CAB is protected with adequate CU for P & CP. 4 The RCC's in P & CP are surplus to the minimum program requirements, but as CU for P & CP, they may be hayed/grazed the year around. - 5-

7 Table. Results Integrated Farm Management Program Option - 00 Acre Farm with Full Base Deficiency Payment Acres Cropland Summary By Use Acres Maximum Pay Actual Pay Can Hay/graze After Oat Harvest Only Anytime After 5 mo. exclusion only Crops., Corn Oats/ Alfalfa Alfalfa Forage Sorghum Legume/grass Total RCC Ave. 7 Acres or 6% Base Use Corn for Pay NFA RCC for Pay RCC for P & CP RCC on ACR Other ACR " 0 Total ACR is 7.5% for 99 and assumed to be 0% for other years. Can be hayed/grazed after oat harvest since it is considered to be a RCC. Includes 50% of legume/grass declared as RCC on ACR plus all alfalfa for P and CP under RCC. Includes the remainder of legume/grass and all forage sorghum on ACR

8 Table 4. Example 0-9 for 00 Acre Farm with Full Base- Assume goal is to establish 80 acres of alfalfa over a 5-year period. ACR NFA Crops by Farm Program Category Acres Forage Sorghum Grass Corn Oats/alfalfa CU for 8% (Non-Pay)., Forage Sorghum.4 CU for Pay Establish Alfalfa CU forp& CP Alfalfa Pay Acres Corn Total ACR is 7.5% for 99 and assumed to be 0% for other years. NFA does not have to be 0 acres as long as the CAB is protected with adequate CU for P and CP. Oats for grain (or any other small grain for grain) cannot be used as CU along with the alfalfa since oats is not a conservation use. - 7-

9 Table 5. Results 0-9 for 00 Acre Farm with Full Base. Deficiency Payment Acres some level) Cropland Summary By Use Acres Maximum Actual Pay Can Hay/graze Anytime After 5 month exclusion only Crops., Corn Establish Alfalfa Oats/alfalfa Alfalfa Forage Sorghum 7.4 Grass Base Use Corn for Pay CU for Pay CU for P & CP CU for 8% (Non-Pay).4 NFA ACR Total ACR is 7.5% for 99 and assumed to be 0% for other years. Includes oats/alfa:fa under NFA and CU for P and CP. Includes all ACR, CU for 8% and CU for pay

10 Table 6. Example Integrated Farm Management Program Option for 00 Acre Farm with 50 Acre Corn Base - Assume goal is to establish 80 acres of alfalfa over a 5-year contract. BASE ACRES ACR NFA Crops by Farm Program Category Acres Legume/grass (RCC) Com Soybeans RCC., For pay (Oats/alfalfa) P & CP (Alfalfa) Pay Acres Corn NON-BASE ACRES Soybeans Alfalfa ACR is 7.5% for 99 and assumed to be 0% for other years. This would not need to be an RCC, but if so, it will permit haying/grazing of 50% of the ACR anytime. Up to.5 acres of alfalfa could be placed under NFA reducing this to 7.5 acres. Then soybeans would not be planted, but pay acres of corn could be increased by.5 acres

11 Table 7. Results Integrated Farm Management Program Option- 00 Acre Farm with 50 Acre Corn Base. Deficiency Payment Acres Maximum Pay Actual Pay Cropland Summary By Use Acres Can Hay/graze After Oat Harvest Anytime After 5 mo. exclusion Crops Com Oats/alfalfa Alfalfa Soybeans Legume/grass Total RCC Ave. 44. acres/year or 9.5% base Base Use Corn for Pay NFA.5.5 RCC for Pay 0 0 RCC for P & CP 0 0 RCC on ACR Total ACR is 7.5% for 99 and assumed to be 0% for other years. Can be hayed/grazed after oat harvest since it is considered to be an RCC. Includes 50% of legume/grass declared RCC on ACR, all alfalfa for P and CP, and all alfalfa on non-base acres. Represents other 50% of ACR

12 Table 8. Example 0-9 for 00 Acre Farm with 50 Acre Corn Base- Assume goal is to establish 80 acres of alfalfa over a 5-year contract and be permitted to hay/graze the alfalfa as frequently as possible. BASE ACRES ACR NFA Crops by Farm Program Category Acres Grass Corn Soybeans Oats/alfalfa CU for 8% (Non-Pay) Forage Sorghum CU for Pay Establish Alfalfa CU for P & CP Alfalfa Pay Acres Corn NON-BASE ACRES Soybeans o 0 Alfalfa ACR is 7.5% for 99 and assumed to be 0% for other years. Oats for grain (or any other small grain) cannot be used as CU along with the alfalfa since oats is not a conservation use. - -

13 Table 9. Results 0-9 for 00 Acre Farm with 50 Acre Corn Base Deficiency Payment Acres some level) Maximum Actual Can Hay/graze Cropland Summary By Use Acres Anytime 0 0 After 5 month exclusion Crops., Com Establish Alfalfa 0 0 Oats/alfalfa 0 0 Alfalfa 0 0 Soybeans Forage Sorghum 9. 9 Grass. 5 Base Use Corn for Pay CU for Pay 0 0 CU for P & CP 0 0 CU for 8% (Non-Pay) 9. 9 NFA.5.5 ACR. 5 Total ACR is 7.5% for 99 and assumed to be 0% for other years. Includes oats/alfalfa under NFA, CU for P and CP, and alfalfa on non-base acres. Includes all ACR, CU for 8%, and CU for pay. - -

14 References Cited Agrirultural Stabilization and Conservation Service. 99. Feed Grain, Rice, Cotton, and Wheat Programs S PA (Production Adjustment), including amendments through United States Congress "Food, Agriculture Conservation and Trade Act of 990: Conference Report to Accompanying S.80" 0 st Congress nd Session. U. S. Government Printing Office, Washington, D.C. October. U.S.D.A. Agricultural Stabilization and Conservation Service. 99. "Food, Agriculture, Conservation and Trade Act; Implementation: Final Rule." Federal Register, Vol. 56, No. 76. April9, pp , ACR- ARP- CAB- Glossary of Acronyms Acreage Conservation Reserve. The crop acreage base that must annually be placed in a conservation use to participate in the farm program (sometimes called set-aside). Acreage Reduction Program. The official name for the annual program that requires ACR and results in potential deficiency payments. Crop Acreage Base. The average number of acres considered planted to a program crop (corn, oats, barley, sorghum, wheat, cotton, peanuts) for harvest in the previous five years. Flex acres are considered planted to the underlying base crop even when planted to another program crop. For example, corn flex acres planted to wheat are considered planted to corn and do not affect wheat base history. cu- FACTA- IFM - NFA- RCC Conservation Use: - CU for P and CP. CU for planted and considered planted. Base acres under the basic and 0-9 programs that can be hayed or grazed anytime. CU for Pay. That portion of the base acres under 0-9 on which guaranteed deficiency payments are paid. CU for 8% or nonpay. Eight percent of the maximum payment acres under 0-9 participation that must be devoted to conservation use. Food, Agriculture, Conservation and Trade Act of 990 Integrated Farm Management Program Option. The subject of this circular. Normal Flex Acres. Currently set at 5 percent of CAB. Deficiency payments are not made on these acres. Resource Conserving Crop. See text of circular for complete definition. An option under the commodity program where a farmer can plant from 0 to 9 percent of his/her maximum pay acres to the program crop and receive guaranteed deficiency payment for 9 percent of the maximum payment acres. 'Based in part on "99 Glossary of Farm Program Terms" by Roger Selley, Ext. Farm Management Specialist, South Central Research and Extension Center, Univ. of Nebraska, Cl~y Center, NE. - -