Decisions to be Made - PDF Free Download

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Decisions to be Made 1. Base Acre Reallocation Decision 2. Payment Yield Update Decision 3. Decision between Price Loss Coverage PLC (price based) Agriculture Risk Coverage ARC (revenue based) 4. Integrating Supplemental Coverage Option (SCO) with crop insurance 3

Consider YOUR Objectives What are your risk management needs? What are your objectives with ARC, PLC/SCO choices? Yield risk, price risk, revenue risk, catastrophic low prices Are you attempting to maximize farm program payments or manage revenue risk? Balance and consider near-term payments vs. long-term risk management. Get comfortable with your risk position no matter what happens in the future. 4

Timeline for Actions Updated by USDA Base Acre Reallocation and Yield Updates: September 29, 2014 through February 27, 2015 March 31, 2015 Selection of Crop Insurance Options, RP, ACR, SCO March 1 through March 15, 2015 Election of ARC-CO, ARC-IC, or PLC for 2014-2018 November 17, 2014 through March 31, 2015 ARC/PLC Annual Enrollment for 2014-15 crop years: Proposed for Mid-April through Summer of 2015 5

Program Compliance Items CCC-931 Average AGI Certification and Consent to Disclosure of Tax Information *$900,000 AGI Limitation AD-1026 Highly Erodible Land Conservation and Wetland Conservation Certification *now also linked to crop insurance subsidy. CCC-901,902, etc. Actively Engaged in Farming/Cash Rent Tenant Determination *Applicable to ARCPLC Program Contact your county FSA for other items. 6

Summary Acreage History Report received in August, 2014 7

Base Acre Decision & Payment Yield Decision Reallocate Base Acres according to 2009-2012 Plantings or Keep Current Base Reallocate based on 2009-12 plantings Base Acre Decision Do not reallocate, keep current base * * * * * * * * * * * * SEPARATE DECISIONS * * * * * * * * * * Update to 90% of 2008-12 avg. county yield Payment Yield Decision Do not update, keep payment yield Update Payment Yields to 90% of 2008-2012 average yield or Keep Current Payment Yields 8

Base Acre Decision & Payment Yield Decision Update Decision (Base & Yield) : A current OWNER makes the update decision: Reallocate or Retain Base Acres Update or Retain Yields NOTE: Current owner is defined as an owner on the farm the day the CCC-858 form is submitted to the county office 9

Base Acre Decision Reallocate based on 2009-12 plantings Do not reallocate, keep current base 12 Farm owners get a one-time opportunity to reallocate base acres. Not an increase of your total base acres, but a reallocation among your base acres.

Base Acre Decision Farm Example #1 Farm #9999 Total Cropland 200 acres Corn Base 80 a. Soybean Base 80 a. Oats Base 40 a. Crop History 2009 2010 2011 2012 Corn 100 90 100 90 Soybean 90 100 90 100 13

USDA Base Reallocation Tool www.fsa.usda.gov/fsa/webapp?area=home&subject=arpl&topic=landing 14

Base Acre Decision Farm Example #2 Farm #8888 Total Cropland 200 acres Corn Base 80 a. Soybean Base 80 a. Oats Base 40 a. Crop History 2009 2010 2011 2012 Corn 100 100 100 100 100 100 100 100 Alfalfa (not covered commodity) 15

USDA Base Reallocation Tool www.fsa.usda.gov/fsa/webapp?area=home&subject=arpl&topic=landing 16

Base Acre Decision Farm Example #3 Farm #7777 Total Cropland 200 acres Corn Base 100 a. Soybean Base 100 a. Crop History 2009 2010 2011 2012 Corn 120 200 80 120 Soybeans 80 0 120 80 17

USDA Base Reallocation Tool www.fsa.usda.gov/fsa/webapp?area=home&subject=arpl&topic=landing 18

Base Acre Decision Farm Example #4 Farm #6666 Total Cropland 112 acres Corn Base 80 a. Soybean Base 20 a. Oats Base 12 a. Crop History 2009 2010 2011 2012 Corn 120 200 80 120 Soybeans 80 0 120 80 19

USDA Base Reallocation Tool www.fsa.usda.gov/fsa/webapp?area=home&subject=arpl&topic=landing 20

The Value of Corn & Soybean Base The following slides compare the value of corn and soybean base in Kossuth and Lucas Counties by comparing estimated 5-yr total payments from ARC and PLC for corn and for soybeans on graphs. The line that is further to the right and lower is the dominant choice at that particular probability. 21

Understanding Charts Used in the Analysis Probability that payment will be that amount or lower The line being to the right shows dominance The line being to the right shows dominance 22 CDF graph: Cumulative Distributive Function

The value of Corn & Soybean Base The right most line shows dominance Both corn choices are dominant compared to the soybean choices. 23

The value of Corn & Soybean Base The right most line shows dominance Corn is still dominant, but less dominant in this county. 24

The Value of Corn & Soybean Base For Kossuth county, corn base is expected to have more value than soybean base as either option in corn (ARC or PLC) dominate both of the soybean options. For Lucas county, corn base is more valuable that soybean base, but is not as dominant as in Kossuth county. About 7% of the time, soybean base in ARC will outperform corn base in ARC. 25

Payment Yield Decision Update to 90% of 2008-12 average yield Do not update, keep current payment yield Update Payment Yields to 90% of 2008-2012 average yield or Keep Current Payment Yields 26

Update Payment Yields to 90% of 2008-12 avg. yield or Keep Current Payment Yields Farm owners get one-time opportunity to update payment yields. Crop-by-crop decision: yields can be updated for one crop, but not the other. Payment yields will be 90% of 2008-12 average yield per planted acre. If farm yield in any of the years is less than 75% of the 2008-12 county yield, USDA will assign 75% of county yield for that year as a plug yield. 27

Using Plug Yields in Payment Yield Update If any year s yield (2008-12) is less than 75% of the 2008-2012 simple yield average, then the substitute yield of 75% of the 08-12 county average is used for that year in the calculation. If there are no yield records for a year the crop was planted, then substitute yield is used for that year. If there is a year with no planted acres for the crop, then that year is not used in the average Prevented planting acres are also not used in the average. 29

Update Payment Yields to 90% of 2008-12 avg. yield or Keep Current Payment Yields 30 Example #1: Payment Yield Using Plug Yield: Corn County Example Adjusted Yield Farm Yield Farm Yield 2008 167 165 165 2009 178 181 181 2010 168 175 175 2011 191 195 195 2012 149 100 128 Average Yield 171 163 169 Plug (75% of Avg.) 128 Updated Payment Yield (90%) 152 Current Payment Yield 138 Easy decision here, but each farm and/or county may face a different situation.

Update Payment Yields to 90% of 2008-12 avg. yield or Keep Current Payment Yields Example #2: Payment Yield Using Plug Yield: Corn 31 County Example Adjusted Yield Farm Yield Farm Yield 2008 167 165 165 2009 178 not planted 2010 168 175 175 2011 191 not planted 2012 149 100 128 Average Yield 171 147 156 Plug (75% of Avg.) 128 Updated Payment Yield (90%) 140 Current Payment Yield 138 Easy decision here, but each farm and/or county may face a different situation.

Certified Yield Evidence Self-certified yields are subject to spot-check and the owner will be responsible for providing the records to verify the accuracy of the yields. Acceptable records for a spot-check would include: RMA data, specific year yields used in APH records Production Evidence, sold or commercial storage On-Farm storage records FSA Loan Records ACRE program yields Keep your records in case of spot-check 32

Using Plug Yields in Payment Yield Update Notes: The plug yields really matter to the payment yield update some counties may have 2 production shortfalls in the 5 year period. If you had a low yield(s) in those years, your updated yield may not be as high as expected. Review your 2008 2012 yield history for corn & soybeans. The next two slides are maps that show the plug yields (for the yield update decision only) 33

Farm Program Decision PLC ARC-CO (county) ARC-IC (individual) PLC = Price Loss Coverage ARC = Agriculture Risk Coverage 37

ARC/PLC Election Process Current Producers make the Election of PLC, ARC-CO or ARC-IC on each FSA Farm Number: a. Current producers with an interest in cropland on the farm will make the one-time irrevocable election. b. Failure to make an election by the deadline will result in PLC election starting in 2015 through 2018 and NO payments for 2014. 38

ARC/PLC Election Process Current Producer: Means the person or legal entity meeting the definition of producer on the day that person or legal entity is signing any form or performing any action required for the election process. 39

ARC/PLC Election Process Definition of a producer: A person or legal entity with a share in a crop on cropland on the farm and shares in the risk of producing the crop on the farm. NOTE: Cash Rent Owners do not have a share in the crop nor does the owner share in the risk of producing the crop 40

Farm Program Decision One-time, five year election decision, each program based on base acres PLC ARC (county) ARC (individual) Decision between Price Loss Coverage (price based) Agriculture Risk Coverage (revenue based) 41

Farm Program Decision PLC ARC (county) ARC (individual) Program Name: What is covered? Payment on what percentage of base acres? How is benchmark revenue/price guarantee determined? If there is a payment, what is the payment? 42 Price Loss Coverage Agriculture Risk Coverage (county) Agriculture Risk Coverage (individual/farm) Individual commodities Individual commodities All commodities combined Payments on 85% of base acres Reference Prices: Corn = $3.70 Soybeans = $8.40 Difference between actual price (larger of actual MYA price & the loan rate) and reference price X 85% PLC participants may buy Supplemental Coverage Option (SCO) starting in 2015 Payments on 85% of base acres 5-year Olympic average* of county yields multiplied by the 5-year Olympic average* of national prices Difference between actual county revenue and county ARC revenue guarantee (86% of benchmark) X 85% (limit:10% of benchmark) Payments on 65% of TOTAL base acres on farm 5-year Olympic average* of revenue sum (national price X farm yield) for all covered commodities Difference between actual revenue and individual ARC revenue guarantee (86% of benchmark) X 65% (limit:10% of benchmark) *Olympic average (drop high & low before averaging)

What is covered? Payment on what percentage of base acres? How is benchmark revenue/price guarantee determined? If there is a payment, what is the payment? Farm Program Decision Price Loss Coverage (PLC) Individual commodities Payments on 85% of base acres Reference Prices: Corn = $3.70 Soybeans = $8.40 Difference between actual price (larger of actual MYA price & loan rate) and reference price X 85% PLC participants may purchase Supplemental Coverage Option (SCO) starting in 2015 43

Farm Program Decision Price Loss Coverage (PLC) What is covered? Individual commodities With PLC, corn and soybeans can be covered separately 44

Farm Program Decision Price Loss Coverage (PLC) Payment on what percentage of base acres? Payments on 85% of base acres For Farm Example #1: 100 A. Corn base &100 A. Soybean base: Payment would be on 85 A. corn and 85 A. soybeans; >Not based on planted acres< 45

Farm Program Decision Price Loss Coverage (PLC) How is price guarantee determined? Reference Prices: Corn = $3.70 Soybeans = $8.40 For PLC, payments are made only if Marketing Year Average (MYA) price is below reference price 46

Farm Program Decision Price Loss Coverage (PLC) If there is a payment, what is the payment? Difference between actual price (larger of actual MYA price & loan rate) and reference price X 85% Example: If MYA price for 2015 is $3.45, payment would be ($3.70 minus $3.45) X payment yield X 85% X base acres 47 *subject to payment limits

Farm Program Decision Agriculture Risk Coverage (ARC-CO) What is covered? Payment on what percentage of base acres? How is benchmark revenue/price guarantee determined? If there is a payment, what is the payment? Individual commodities Payments on 85% of base acres 5-year Olympic average* of county yields multiplied by the 5-year Olympic average* of national prices Difference between actual county revenue and county ARC revenue guarantee (86% of benchmark) X 85% (limit:10% of benchmark) *Olympic average (drop high & low before averaging) 48

Farm Program Decision Agriculture Risk Coverage (ARC-CO) What is covered? Individual commodities With ARC-CO, corn and soybeans can be covered separately. For example, a farm can have ARC-CO for soybeans and PLC for corn. 49

Farm Program Decision Agriculture Risk Coverage (ARC-CO) Payment on what percentage of base acres? Payments on 85% of base acres For Farm Example #1: 100 A. Corn base & 100 A. Soybean base: Payment would be on 85 A. corn and 85 A. soybeans; >Not based on planted acres< 50

Farm Program Decision Agriculture Risk Coverage (ARC-CO) How is benchmark revenue determined? 5-year Olympic average* of county yields multiplied by the 5-year Olympic average* of national prices *Olympic average (drop high & low before averaging) 51 County Yield 2009 178 2010 168 2011 191 2012 149 2013 167 Olympic Avg. Yield 171 MYA Corn 2009 $3.70 2010 $5.18 2011 $6.22 2012 $6.89 2013 $4.46 Olympic Avg. Price $5.29 171 bpa X $5.29/bu. = $905 is benchmark. Payments are based on 86% of benchmark or $778/base acre.

Farm Program Decision Agriculture Risk Coverage (ARC-CO) If there is a payment, what is the payment? Difference between actual county revenue and county ARC revenue guarantee (86% of benchmark) X 85% (limit:10% of benchmark) Payments are based on 86% of benchmark or $778/base acre. If Actual County Revenue (county yield X MYA Price) for a year is $728, example payment would be $50 per acre. Payment can not exceed 10% of benchmark or $90.50 in this example 52 *subject to payment limits

Farm Program Decision Agriculture Risk Coverage (ARC-IC) What is covered? Payment on what percentage of base acres? How is benchmark revenue/price guarantee determined? If there is a payment, what is the payment? All commodities combined Payments on 65% of TOTAL base acres on farm 5-year Olympic average* of revenue sum (national price X farm yield) for all covered commodities Difference between actual revenue and individual ARC revenue guarantee (86% of benchmark) X 65% (limit:10% of benchmark) *Olympic average (drop high & low before averaging) 53

Farm Program Decision Agriculture Risk Coverage (ARC-IC) What is covered? All commodities combined With ARC-IC, all covered commodities are combined. For example corn, soybeans, oats and all program crops which have established base acres are combined. 54

Payment on what percentage of base acres? Farm Program Decision Agriculture Risk Coverage (ARC-IC) Payments on 65% of TOTAL base acres on farm For Farm Example #1 (100 A. Corn base, 100 A. Soybean base): Payment would be on 130 acres (65% of 200 A. total base). 55

How is benchmark revenue determined? Farm Program Decision Agriculture Risk Coverage (ARC-IC) *Olympic average (drop high & low before averaging) 5-year Olympic average* of revenue sum (national price X farm yield) for all covered commodities 1. National Price X Farm Yield for each of 5 years 2. 70% of county T-yield can be used as plug. 3. The 5-year Olympic average of those revenues. 4. Allocation weighted by planted acres 56

If there is a payment, what is the payment? Farm Program Decision Agriculture Risk Coverage (ARC-IC) Difference between actual revenue and individual ARC revenue guarantee (86% of farm benchmark) X 65% (limit:10% of benchmark) Payments are based on 86% of benchmark. If Actual Farm Revenue (farm yield X MYA Price) for a year is less than revenue guarantee, payment is made. Payment can not exceed 10% of farm benchmark. 57 *Subject to payment limitations

Farm Program Decision Agriculture Risk Coverage (ARC-IC) Example 100 A. Corn base, 100 A. Soybean base MYA Farm MYA Farm Corn Yield Revenue Soybean Yield Revenue 2009 $3.70 165 $611 $ 9.59 45 $432 2010 $5.18 173 $896 $ 11.30 42 $475 2011 $6.22 175 $1,089 $ 12.50 49 $613 2012 $6.89 93 $641 $ 14.40 43 $619 2013 $4.46 182 $812 $ 13.00 54 $702 Olympic Average Revenue (Benchmark Revenue) $783 $569 ARC -IC Revenue Guarantee (86%) $673 $489 Gray figures indicate plugs used: Reference price and/or 70% of county yield. 58

Farm Program Decision Agriculture Risk Coverage (ARC-IC) Example ARC-IC Revenue Guarantee (86%) Corn $673 Soybeans $489 If planted 60% corn, 40% soybeans: Farm Revenue benchmark (60% of $673)+(40% of $489)=$600 Actual revenue: Corn = $600, Soybeans = $500. (60% of $600)+(40% of $500)=$560 Benchmark less Actual = $40 X 200 total base acres = $8000. Paid at 65% = $5,200 or $26/acre Max would be 10% of Farm Revenue Benchmark of $600 or $60/acre. 59

Market viewpoint influences: Can you project the national average cash prices in 2014, 2015, 2016, 2017 and 2018? Marketing Year Average (MYA) prices are used Annually, this MYA price must be below the reference price to trigger a PLC payment $3.70/bu. Corn; $8.40/bu. Soybeans Price projections and information FAPRI, USDA, CBO, Futures-Based and others 61

Prices used in PLC and ARC Price Loss Coverage (PLC) Reference Prices SET UNTIL 2018 Corn $3.70/bu. Soybeans $8.40/bu. 2014 ARC Price ARC 5 year Olympic Average Market Year Price (for 2014) Year Corn Soybeans 2009 $3.55 $3.70 $9.59 2010 $5.18 $11.30 2011 $6.22 $12.50 2012 $6.89 $14.40 2013 $4.46 $13.00 $5.29 $12.27 These can change every year! 62

Prices used in PLC and ARC Price Loss Coverage (PLC) Reference Prices SET UNTIL 2018 Corn $3.70/bu. Soybeans $8.40/bu. 2015 ARC ARC 5 year Olympic Average Market Year Price Est. (for 2015) Year Corn Soybeans 2009 $3.55 $3.70 $9.59 2010 $5.18 $11.30 2011 $6.22 $12.50 2012 $6.89 $14.40 2013 $4.46 $13.00 2014 $3.70 $3.50 $10.00 $5.29 $12.27 2015 same ARC price as 2014 63 2015-2017 Marketing Year Average (MYA) prices used in ARC price calculations are the average of FAPRI and USDA projected price series.

National Average Corn Cash Price Forecasts $5.29/bu. Olympic Average National Price 64 Source: USDA WASDE & FAPRI (Oct 14), ISU Extension

National Avg. Soybean Cash Price Forecasts $12.27/bu. OA National Price 65Source: USDA WASDE & FAPRI (Oct 14), ISU Extension

Price Comparison: Corn USDA prices: 2014 is November 2014 WASDE price projections for 2014/15. 2015/16 to 2018/19 are the USDA long-term price projections for 2015/16 to 2018/19 (which were determined in February 2014). FAPRI prices: October 2014 price projections for 2014/15 to 2018/19. Price intercepts: 2014 is November 2014 WASDE price projections for 2014/15. 2015/16 to 2018/19: Average of USDA & FAPRI projections 66

Price Comparison: Soybeans USDA prices: 2014 is November 2014 WASDE price projections for 2014/15. 2015/16 to 2018/19 are the USDA long-term price projections for 2015/16 to 2018/19 (which were determined in February 2014). FAPRI prices: October 2014 price projections for 2014/15 to 2018/19. Price intercepts: 2014 is November 2014 WASDE price projections for 2014/15. 2015/16 to 2018/19: Average of USDA & FAPRI projections 67

Prices used in PLC and ARC Price Loss Coverage (PLC) Reference Prices SET UNTIL 2018 Corn $3.70/bu. Soybeans $8.40/bu. 2016 ARC Price ARC 5 year Olympic Average Market Year Price Est. (for 2016) Year Corn Soybeans 2009 $3.55 $3.70 $9.59 2010 $5.18 $11.30 2011 $6.22 $12.50 2012 $6.89 $14.40 2013 $4.46 $13.00 2014 $3.70 $3.50 $10.00 2015 $3.70 $3.52 $8.89 $4.79 $11.83 ARC price starts to drop in 2016 from $5.29 and $12.27 68

Prices used in PLC and ARC Price Loss Coverage (PLC) Reference Prices SET UNTIL 2018 Corn $3.70/bu. Soybeans $8.40/bu. 2017 ARC Price Year Corn Soybeans 2009 $3.55 $3.70 $9.59 2010 $5.18 $11.30 2011 $6.22 $12.50 2012 $6.89 $14.40 2013 $4.46 $13.00 2014 $3.70 $3.50 $10.00 2015 $3.70 $3.52 $8.89 2016 $3.70 $3.67 $9.23 Both ARC prices continue decline; adding lower priced years 69 ARC 5 year Olympic Average Market Year Price Est. (for 2017) $3.95 $10.74

Prices used in PLC and ARC Price Loss Coverage (PLC) Reference Prices SET UNTIL 2018 Corn $3.70/bu. Soybeans $8.40/bu. 70 2018 ARC Price ARC 5 year Olympic Average Market Year Price Est. (for 2018) Year Corn Soybeans 2009 $3.70 $3.55 $9.59 2010 $5.18 $11.30 2011 $6.22 $12.50 2012 $6.89 $14.40 2013 $4.46 $13.00 2014 $3.50 $3.70 $10.00 2015 $3.70 $3.52 $8.89 2016 $3.67 $3.70 $9.23 2017 $3.82 $9.66 $3.74 $9.63 Corn ARC price close to reference price; Soybean ARC price never below reference price.

Key Points of ARC and PLC PLC and ARC-CO are commodity by commodity; ARC-IC based on all commodities on farm combined. Relationship of Olympic average price and PLC reference price over the 5 year time period are influential in program choice. If price is well below PLC reference price ($3.70 corn; $8.40 soybeans) during the farm bill period, PLC may be worth consideration; Higher prices? ARC may have an advantage. ARC-CO pays on 85% of base acres, ARC- IC pays on 65% of base acres. 71

Let s see what can happen in 2014 to ARC-CO and PLC when the market year average corn price changes. The following slides are updated from the original presentation with the USDA 2014 county yields released in Feb. 2015 72

Updated with USDA 2014 county yields released in Feb. 2015 $3.00

Updated with USDA 2014 county yields released in Feb. 2015 $3.25

Updated with USDA 2014 county yields released in Feb. 2015 $3.50

Updated with USDA 2014 county yields released in Feb. 2015 $3.75

Updated with USDA 2014 county yields released in Feb. 2015 $4.00

Let s see what can happen in 2014 to ARC-CO and PLC when the market year average soybean price changes. 78

Not updated from original presentation

What you have seen so far is static analysis. Now moving into dynamic (Stochastic) analysis. 82

Understanding Charts Used in the Analysis 83

Understanding Charts Used in the Analysis PLC risk management dominates here (larger payments are expected from PLC over this range of the distribution). ARC maxed out (shown by vertical line). ARC risk management dominates here (larger payments are expected at a higher probability from ARC in this area). 85 CDF graph: Cumulative Distributive Function

Kossuth Corn Updated with USDA 2014 county yields released in Feb. 2015 87 Prices truncated to the $3.40-$3.90 range in the Feb. WASDE report.

Lucas Corn Updated with USDA 2014 county yields released in Feb. 2015 88 Prices truncated to the $3.40-$3.90 range in the Feb. WASDE report.

Kossuth Soybeans Updated with USDA 2014 county yields released in Feb. 2015 89 Prices truncated to the $9.45 10.95 range in the Feb. WASDE report.

Lucas Soybeans Updated with USDA 2014 county yields released in Feb. 2015 90

Updated with USDA 2014 county yields released in Feb. 2015 Kossuth Corn & Soybeans 91 Prices truncated to the price range in the Feb. WASDE report.

Updated with USDA 2014 county yields released in Feb. 2015 Lucas Corn & Soybeans 92 Prices truncated to the price range in the Feb. WASDE report.

Supplemental Coverage Option (SCO) An additional insurance policy to cover shallow losses Shallow loss = part of the deductible on the producer s underlying crop insurance policy SCO has a county-level payment trigger Indemnities are paid when the county experiences losses greater than 14% Premium subsidy: 65% Starts in 2015 Can t elect ARC for a crop and purchase SCO. 94

Supplemental Coverage Option (SCO) A couple bad years, APH taken a hit, SCO is county based, A county-based policy may give a better top end coverage, but vulnerable to local event. Individual disaster coverage can be put in place by using a lower % RP product 65% RP & 21% SCO or 75% RP & 11% SCO 95

96 ARC & RP85 vs PLC RP75 & SCO Kossuth Corn

97 ARC & RP85 vs PLC RP75 & SCO Kossuth Corn 2015-2018

98 ARC & RP85 vs PLC RP75 & SCO Kossuth Corn & Soybeans

99 ARC & RP85 vs PLC RP75 & SCO Kossuth Corn & Soybeans 2015-2018

Side-by-side Program Comparison 100

Agricultural Act of 2014 PLC ARC-CO ARC-IC Price and Yield Comparison Uses MYA price and PLC yield Uses MYA price and County Average Yield Uses MYA price and producer s historical yield on the farm(s) Base Acre Comparison Payment determined by individual covered commodity crop base acres Payment determined by individual covered commodity crop base acres Payment determined by planted covered commodities combined on the farm(s) in the State 101

Agricultural Act of 2014 PLC ARC-CO ARC-IC Payment Acre Comparison Payments made on 85% of specific crop base acres on farm Payments made on 85% of specific crop base acres on farm Payments made on 65% of TOTAL base acres on farm Production Reports Production report NOT required Production report NOT required Requires annual production report of all covered commodities planted 102

Agricultural Act of 2014 PLC ARC-CO ARC-IC Requirement to Plant? Planting of covered commodities NOT required Planting of covered commodities NOT required Planting of covered commodities REQUIRED Program Election Comparison Elect by Covered Commodity Base Acres by farm May mix ARC-CO and PLC on same farm by base crop Elect by Covered Commodity Base Acres by farm May mix ARC-CO and PLC on same farm by base crop Elect on ALL Covered Commodities on the farm ARC-CO & PLC not eligible on farm 103

Agricultural Act of 2014 PLC ARC-CO ARC-IC When Do Payments Trigger? When the effective price of a base acreage commodity falls below reference price When the ACTUAL county revenue (per acre) of a base acreage commodity falls below the ARC-CO guarantee for that crop the county. When ACTUAL farm revenue from enrolled farms falls below the calculated ARC-IC guarantee for all enrolled farms in the state. 104

Payment Limitations Maximum dollar amount that can be received annually, directly or indirectly, under various programs by a person or legal entity. Such limitations on payments are controlled by direct attribution. 105

106 ARC vs PLC Kossuth 1,000 acres Corn & 1,000 acres Soybeans

107 ARC vs PLC Kossuth 1,000 acres Corn & 1,000 acres Soybeans 2014-2018

Payment Limitations Payment Limitations can impact program choice If payment limits are likely and you have multiple farm numbers: Consider splitting enrollment between ARC & PLC with higher yielding farms in PLC. 108

Program Summary Planting and harvesting fruits and vegetables (FAV) is subject to an acre for acre payment reduction when: (No longer a violation ) - More than 15% of base acres of the farm enrolled in ARC-CO or PLC are planted to FAV - More than 35% of base acres of a farm enrolled in ARC-IC are planted to FAV ARC/PLC Payments: 2014 payments are issued after October 1, 2015 for PLC/ARC- CO/ARC-IC if triggered 2015 2018 payments are issued after MYA prices are determined and after October 1 of the subsequent year 109

Program Summary Current FSA-211, Power of Attorneys, are valid for the ARCPLC program if Section A and B are marked as follows: Section A, item 2, All current and ALL future programs Section B, item 1, All Actions Check with FSA Office on Power of Attorney forms. 110

Your Actions ARC/PLC Program Process: Update: Owners can Reallocate Base acres and/or update Counter-Cyclical Yields. Elect: Once Base Acres and Yields are set, then the Election of PLC, ARC-CO or ARC-IC can completed. Enroll: Once Election has been completed then Enrollment takes place. 111

Farmer Decision Tools 112

Base Reallocation, Yield Update and USDA funded Decision Tools on USDA Website http://www.fsa.usda.gov/fsa/webapp?area=home&subject=arpl&topic=landing 113

ISU s Farm Bill Calculator and Analyzer Type of Information Needed Farm identification Program base acres Reallocated base acres CC (counter-cyclical or old program) yield 2008-12 actual farm yields per planted acre 2014-18 planted and considered planted acres 2014-18 planted yield per acre www.extension.iastate.edu/agdm 114

ISU s 2014 Farm Bill Analyzer Example Start by zeroing out the planted and projected planted acres so that you can see only program effects.

ISU s 2014 Farm Bill Analyzer Example Select from: USDA FAPRI Futures

ISU s 2014 Farm Bill Analyzer Example USDA Price Projections (0 planted acres)

ISU s 2014 Farm Bill Analyzer Example Here we inserted the price intercepts used in the Farm Bureau Crop Model (average of FAPRI and USDA)

ISU s 2014 Farm Bill Analyzer Example FB Price Intercepts (0 planted acres)

ISU s 2014 Farm Bill Analyzer Example When you change the price projection selection....... the crop insurance price columns (projected & harvest) automatically adjust to a likely price range.

ISU s 2014 Farm Bill Analyzer Example Add planted acres to include the effects of crop revenue and crop insurance in analysis.

ISU s 2014 Farm Bill Analyzer Example USDA Price Projections

ISU s 2014 Farm Bill Analyzer Example Also, provides dollar amounts of payments and net indemnities for each combination listed.

ISU s 2014 Farm Bill Analyzer Example

ISU s 2014 Farm Bill Analyzer Example Low Revenue tab = bottom 10% of total crop revenues in each year

ISU s 2014 Farm Bill Calculator Example Deterministic (no simulations are involved)

127 Agriculture Policy Analysis System (APAS) Information Needed APAS Sample Farm quick review of your county APAS Custom Farm build your farm Farm: state, county, # base acres, entities Add crops: crop, expected yield, 2014 planted acres Base acres, payment yield Select price series: CBO, USDA, FAPRI, Custom Farm Analytics: comparing programs, includes crop insurance

128 Agriculture Policy Analysis System (APAS) U. Of Illinois FarmDoc

129 Agriculture Policy Analysis System (APAS)

Agriculture Policy Analysis System (APAS) Select: Safety Net Crop revenue only Scenarios 130

NAAFP (FAPRI and Texas A&M) Information Needed Login and create new farm unit Farm name, Farm #, crop, state, county Input yields, base, crop insurance, future acres, harvest basis, historical yields, FAPRI, USDA or custom price projections are provided. Graphs and tables presented to compare programs 131

133 NAAFP (FAPRI and Texas A&M) Decision Aid

134 NAAFP (FAPRI and Texas A&M)

Selected USDA-FSA Forms 135

136 CCC-859: Yield Worksheet

137 CCC-858: Base Reallocation and Yield Update Decision

138 CCC-857: ARC and PLC Program Election

Reporting on NASS Surveys is Important to Administer Farm Programs and Crop Insurance High quality statistical information is essential for the smooth operation of federal farm programs and crop insurance programs NASS provides the FSA and RMA with important statistics that they use to serve farmers Data are provided in aggregate form so that no individual operation or operator can be identified 139

Programs that Depend on NASS State and County Level Data FSA RMA County Loan Rates for Wheat, Feed Grains and Oilseeds Dairy Programs Area Risk Protection Insurance Plan Loan Repayment Rates Program Parameters for ARC and PLC Non-Insured Crop Disaster Assistance Program (NAP) Livestock Disaster Assistance Programs Conservation Reserve Program (CRP) Beginning Farmer Ownership Loan Eligibility Production Loss Calculations Funding Targets and Allocations Actual Revenue History (ARH) Pilot Program Establishment of Transitional Yields Establishment of Price Elections on Non- Program Crops 140

www.iowafarmbureau.com/farmbill Resources: graphs for your county, links, etc. 141

Resources for your decisions! www.iowafarmbureau.com click on Decision Farm Bill banner PDF s of graphs for each county, links USDA FSA Farm Bill http://www.fsa.usda.gov/fsa/webapp?area=home&subject=arpl&topic=landing Base Allocation Tool, Yield Update Tool on right Decision Tools (FarmDoc, Texas A & M) on bottom ISU Extension and Outreach (information and link to decision tools), http://www.extension.iastate.edu/agdm/info/farmbill.html Farm Bill Information, Ag Risk Library, CFFM, Univ. of Minnesota http://agrisk.umn.edu/default.aspx, Farm Bill under Hot Topics Thank You! Individual questions can best be answered at your county FSA office. Please fill out your evaluation and leave with your facilitator. 142