Farm Bill FAQ: Individual Ag Risk Program
February 2, 2015
Over the past few months, the Nebraska Extension Farm Bill education team has been on the road talking with producers about the 2014 Farm Bill. This is one of a series of articles clarifying some of the common questions asked at these meetings. This article will discuss the Individual Agriculture Risk Coverage Program.
The Agriculture Risk Coverage (ARC) program is a revenue -based program similar to the ACRE program. Within the ARC program there are two selection options: ARC-CO, a county based payment, or ARC-IC, an individual coverage based payment.
ARC – IC is a whole-farm based program. The ARC-IC "farm" includes all farms elected and enrolled in ARC-IC within a state. Payments will be determined by comparing the actual revenue across all covered commodities on the farm to the individual guarantee. If a revenue shortfall exists, payments will be issued on 65 percent of total base acres, regardless of what crop base exists on the ARC-IC farm. Payments made under this program may not exceed 10 percent of the individual benchmark revenue.
Q: What is the deadline to enroll in a commodity program?
A: A program must be elected by Mar. 31, 2015. If no program is elected for a farm number, the farm will automatically be elected into the Price Loss Coverage (PLC) program, and will not be eligible to receive payments for the 2014 crop year. Annual enrollment, regardless of program election, will also be required. Annual enrollment deadlines will be announced in the future. Contact your FSA office to schedule your appointment.
Q: Who makes the decision to elect into a commodity program?
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A: The current producers on the land make the choice to elect that farm number in the PLC program or the ARC program. Current producers are defined as parties with an interest in the cropland, including cropland pasture and alfalfa, on the farm the day the election decision is made. Farmland owners with a cash lease are not considered a current producer for program election. Crop-share landowners are considered current producers.
Q: What crops are eligible for commodity program payments?
A: Barley, canola, corn, crambe, flaxseed, large garbanzo, small garbanzo, grain sorghum, lentils, mustard seed, oats, peanuts, dry peas, rapeseed, long grain rice, medium grain rice, safflower, sesame seed, soybeans, sunflower seed, and wheat.
Q: If I am interested in enrolling in ARC-IC should I update my yields?
A: PLC yields are only used to calculate PLC payments, should a farm elect and enroll in PLC. PLC yields will also be retained for possible use in future farm bills, when the option to update the yield may or may not be available.
Q: If I am interested in enrolling in ARC-IC, should I reallocate my base acres?
A: When deciding whether to reallocate or maintain base acres, the landowner will need compare both base acre scenarios against each commodity program, ARC-CO, ARC-IC and PLC, for each farm number. Reallocating base acres may not benefit all farm numbers.
Q: How are ARC-IC payments calculated?
A: ARC-IC revenues are calculated for a producer based on all ARC-IC farms in a state in which that producer has an interest. All farms elected and enrolled into ARC-IC make up a producer's "ARC-IC Farm." Payments will be made when the average revenue for the producer's "ARC-IC farm" is less than the guarantee for the "ARC-IC Farm." The producer's ARC-IC revenue guarantee is equal to 86 percent of the producer's ARC-IC benchmark revenue. A producer's ARC-IC farm benchmark revenue is the weighted sum of 5-year Olympic revenues for all program crops planted on the farm. The actual revenue is the weighted sum of the actual revenue (actual farm yield times MYA price for the program year) for each crop planted across all ARC-IC enrolled farms. The payment rate is equal to the producer's ARC-IC benchmark guarantee minus the producer's actual ARC-IC revenue, not to exceed 10 percent of the producer's ARC-IC benchmark revenue. When a payment rate is determined for a producer, the payment for each of the producer's ARC-IC enrolled farms is equal to the payment rate times 65 percent of the total base acres on the farm times the producer's share.
Q: How is the marketing year average (MYA) price determined?
A: The marketing year average price, sometimes abbreviated MYA, is the average prices received over a crop's 12-month marketing year. The MYA is determined by monthly USDA NASS surveys of approximately 2,000 buyers nationwide, in 31 states, where 90 percent of sales occur. The marketing year for corn and grain sorghum runs from Sept. 1 through Aug. 31. The marketing year for wheat, oats and barley runs from Jun. 1 through May 31.
Q: What is an Olympic average?
A: An Olympic average is calculated by dropping the high value and low value, then averaging the remaining values.
Q: I have multiple farms. If I enroll one farm number in ARC-IC, do I have to enroll all farm numbers in ARC-IC?
A: No. Different farm numbers can be enrolled in different farm programs.
ARC-IC is elected on a farm-by-farm basis, and an ARC-IC election for a particular farm covers all covered commodities on that farm. A producer is not required to elect all other farms into ARC-IC just because one farm is elected into ARC-IC.
Q: If I enroll more than one farm ARC-IC, how will that affect the revenue calculation?
A: When more than one farm number is enrolled in ARC-IC by a producer, the farms are combined to calculate the benchmark revenue, guaranteed revenue, and actual revenue, based on the weighted sum of revenues calculated for each covered commodity across all ARC-IC elected and enrolled farms.
Q: Do I have to plant a covered commodity on the respective base acres in order to receive an ARC-IC payment?
A: Yes. ARC-IC revenue calculations are based on planted covered commodities on the farm in a given program year. If no covered commodities are planted on the farm in a particular year, no revenue calculations are completed and no payment will be issued for that program year.
Q: If I enroll in a program now, can I change my mind at a later date?
A: The election decision can be withdrawn and changed at any time during the election period which goes through March 31, 2015. This includes when "current producers" on the farm change before March 31, 2015, and the new current producers want to change the program election. The program election decision on file as of March 31, 2015 will apply for the 2014-2018 program years.
Q: I am a cash rent landlord who is changing tenants. If the 2014 cash rent tenant makes a decision prior to the end of their lease, can the 2015 cash rent tenant change commodity programs once their lease begins?
A: Yes, once the new tenant becomes the "current producer" on the lease, they may change the program the farm is enrolled in as long the change is made by the enrollment deadline, March 31, 2015. If the new "current producers" agree with the prior election, they do not need to refile or affirm the prior election.
The decisions to be made in the next few months regarding the Farm Bill are very complex and will last for the duration of this farm bill. If you have questions about the Farm Bill, please attend one of the upcoming Panhandle Farm Bill meetings or contact Jessica Johnson 308-632-1247.
Feb. 3, Kimball 7 a.m. at the Kimball Eagles Club
Feb. 4, Scottsbluff at 9 a.m. at the Panhandle Research and Extension Center
Feb. 6, Rushville, at 1 p.m. at the American Legion
Feb. 12, Sidney at 1 p.m. at the Cheyenne County Community Center
Feb. 17, Alliance at 9 a.m. at the Alliance Library
For the latest information about the Farm Bill visit farmbill.unl.edu.