2014 FARM BILL: COLLABORATION AND

EDUCATION STRATEGIES

Jody Campiche

Oklahoma State University

Disclaimer

This information is based on my understanding of the 2014 farm bill

Some details may be slightly different once the final rules and regulations are released

This information is intended to be for educational purposes only

Decision Aid Effectiveness

For the 2008 farm bill, OK had one of the highest ACRE enrollments in the nation

A large extension effort focused on educating producers on ACRE and developing an Excel-based decision tool to assist producers with the decision

Based on feedback from producers and extension educators across the state, the decision tool was extremely helpful in the decision process

Decision Aid Effectiveness: Oklahoma Experience

1. Presentations covering the basics of each program (for producers and extension educators)

2. Decision tool available via the web or through county extension educators

3. Extension educator training on the decision tool

4. Producer meetings to discuss how to use the tool, information needed, and specific scenarios relevant to the area

5. Producer workshops (with portable computer lab) to assist with entering data into the tool

Decision Aid Effectiveness: Oklahoma Experience

Availability of decision tools is important Need options to obtain extra help (county

educators, producer workshops, etc…)

Want to see specific examples for their area Of course results will vary by farm (crop

mix, farm size, yields, etc…) Easier for producers to understand if they

can see some examples similar to their operations

Producer Feedback:Farm Bill Extension Programs

What do producers want to know?

Which programs provide the best safety net?

Which programs provide the highest payments

First year of sign-up

Life of the farm bill

Producer Feedback:Farm Bill Extension Programs

2014 Farm Bill: Extension Education

Educate producers/landowners/bankers on the differences between past programs and new programs New programs are similar to previous programs – key

differences

Emphasize the interaction between commodity and crop insurance programs and the increased complexity

Start with the details of each program Provide examples (representative farms for the area)

of how each program works Provide examples comparing previous programs to

current programs (such as the differences between ACRE and ARC)

Extension Education

Eliminated Programs

CCP

SURE

ACRE

DP

Changes to Commodity/Crop Insurance Programs

Elimination of direct payments, countercyclical payments, ACRE payments, and SURE payments

One time election of: Price loss coverage (PLC) Agricultural risk coverage (ARC) – county or individual If landowners/tenants don’t reach agreement, no payments for

2014 crop and automatically enrolled in PLC for 2015

New supplemental crop insurance program (SCO) for PLC participants

New supplemental crop insurance program (STAX) for cotton producers

Commodity/Crop Insurance Programs

ARC-I

SCO, STAX

PLC

CROP INSURANCE

COMMODITY PROGRAMS

RP, YP, RP-HPE

ARC-C

Commodity Program/Crop Insurance Choices for Covered Commodities

PLC

PLC + SCO

ARC-County

ARC-Individual

RP, RP-HPE, YP changes?

2014 Farm Bill

One-time decision to reallocate base acres **total base acres cannot increase (will be

the same as on Sept. 30, 2013)

One-time decision to update CC yields on a farm

Decisions at the FSA office

Update base acreage?

Update FSA payment yields?

Enroll each crop/farm in ARC or PLC?

Decisions at the crop insurance office

Purchase SCO for 2015?

If the crop/farm is not in ARC

SCO is a county-level product

SCO only pays if the county has a loss but the premium is much cheaper than an RP policy

If the drought continues, is it likely that both the individual farm and county will have a loss?

SCO Covered Commodities:2015 crop year

Corn Cotton Grain sorghum Rice Soybeans Spring barley Spring wheat Winter wheat

Plant a different crop than base crop

Payment Acres

ARC/PLC paid on base acres Do NOT have to plant to receive ARC/PLC on base acres (not

including cotton base acres)

PLC calculation uses the FSA payment yield

Price loss coverage (PLC)

Similar to the CCP in the 2008 farm bill

Payments when price falls below the reference price Does not account for yield loss

Payments tied to base acreage and FSA program yields

Agricultural Risk coverage (ARC)

Similar to the ACRE program in the 2008 farm bill

Key Differences

Paid on base acreage, not planted acreage

Tied to county or farm yield (ACRE tied to state yield)

Limited to 10% of the benchmark revenue (lower payments than ACRE)

Base Update

Reallocate base acres?

Cannot increase base acres, but can reallocate current base acres

Reallocation based on 2009-12 planted and prevented planted (and double crops if an approved practice)

Base Reallocation Example

2009 2010 2011 2012

Corn 0 0 200 200

Grain Sorghum

150 100 0 0

Wheat 250 300 200 200

Totals 400 400 400 400

Yield Update

Updated payment yield = 90% of the average of the yield per planted acre for the 2008-2012 crop yearsExclude any year when no acreage was planted

to the covered commodityWill likely use crop insurance APH yield data for

2008-2012

Producers with yields in any of the 2008-2012 years that are < 75% of the county average yield can use 75% of the 2008-2012 county average yield as a substitute

Yield Update Example

Wheat CC yield = 35 bu Garfield Co., OK: 75% of 2008-12 yield = 24 (75%

of 24 = 18)

2008 2009 2010 2011 2012 Avg Yield

90% of Avg Yield

Wheat 45 15 42 10 43 35 31

75% Avg Garfield County Yield

24 24 24 24 24

Important Points

The decision to enroll in ARC/PLC varies by crop, region, farm size, etc…

SCO may not be an attractive option for some crops/regions/farms

ARC/PLC paid on 85% of base acres SCO paid on 100% of planted acres

No premium for ARC/PLC Premium for SCO

Payment limits for ARC/PLC No payment limits for SCO

ARC limited to 10% of benchmark revenue PLC/SCO may have higher limits than ARC

Important Points

SCO not available for all crops for 2015

Some producers have base but are not planting a crop

Some producers have a higher level of coverage on their individual policy so SCO is less attractive

Some producers plant more than their base so SCO may be more attractive

Important Points

Interaction between programs

Choices will all take place at different times

This may be particularly confusing for ARC/PLC and SCO No SCO for 2014 crop year

SCO sign-up for the 2015 crop year will occur before ARC/PLC sign-up for the 2014 crop year (for fall planted wheat)

Farm Program Choices

SCO: Slightly Confusing PLC/ARC Details

Example 1 Producer has 100 acres wheat base and

enrolls the wheat in ARC – plants 100 acres of wheat – CANNOT enroll wheat in SCO

Example 2 Producer has 100 acres of wheat base,

enrolls the wheat in ARC - plants 100 acres of corn – CAN enroll the corn in SCO

Payment Timing

2014/15 ARC/PLC payments – will receive around October 2015

2015 SCO payments – may not receive until Spring 2016 (when county yields are final)

SCO/RP/YP/ARC/PLC Decisions

Is SCO offered for the crop/county?

Is ARC a better option for the crop/farm?

Is the base acreage different than current planted acreage?

Will the producer reallocate base acreage?

What is the current RP/YP coverage level?

What is the cost of higher RP/YP coverage vs adding SCO?

Does the producer have enterprise units?

Is the producer planting a large amount of acreage over your base?

Decision Tools – Many Options

SCO Decision Tool – Winter Wheat

OSU/KSU Farm Bill Decision ToolJody CampicheEric DeVuyst

Oklahoma State University

Art BarnabyMykel Taylor

Kansas State University

Results

Questions?

Jody Campiche

jody.campiche@okstate.edu

http://agecon.okstate.edu/agpolicy/

405-744-9811