2014 Farm Bill Basics
Three Step Process:
UPDATE: Owners can Reallocate Base Acres and/or Update Yields.
2. ELECTION: Once Base Acres and Yields are set, then the Election of
PLC, ARC-CO, or ARC-IC can be completed.
3. ENROLLMENT: Once Election has been completed then Enrollment
STEP 1: UPDATE PROCESS
Farm owners have the opportunity to Reallocate Base Acres and/or Update Yields by February 27, 2015.
Base Option: EITHER Retain current (2014) Base Acres OR Reallocate Base Acres (cannot increase or decrease total) based on planting history of covered commodities from 2009 through 2012.
Yield Option: EITHER Retain current CC Yields OR Update Yields based on 90% of the simple average of yields of covered commodities from the years 2008 – 2012.
A Substitute Yield (75% of the 2008 – 2012 county average) is available when the farm’s yield is below the substitute yield in any year OR the crop was planted in a year and owner does not have yield records available.
STEP 2: ELECTION PROCESS
Producers who share in the cropland on the farm will make a one-time 5-year irrevocable election of either PLC, ARC-County, or ARC-Individual. Election is on a Farm by Farm basis. The election period runs to March 31, 2015. Failure to make an election by the deadline will result in a PLC election for 2015 through 2018 and NO payment for 2014.
PLC – offers price protection
ARC-CO – offers revenue protection at the county level
ARC-IC – offers revenue protection at an individual farm level across all farms enrolled and covered commodities planted.
If ARC-CO or PLC is selected on a farm, then each Covered Commodity on the farm will select either ARC-CO or PLC (selection of ARC-CO or PLC is on a crop by crop basis).
Price Loss Coverage Program (PLC)
PLC payments are made when the Effective Price is less than the Reference Price for a covered commodity.
Effective Price is the higher of the Marketing Year Average Price (MYA) for the crop or the National Loan Rate for the crop. MYA prices are calculated based on the marketing year of the commodity (Example: 2014 Corn marketing year runs from September 2014 through August 2015).
Reference Prices remain the same for the life of the farm bill.
Payments are made on 85% of the base acres of the covered commodity.
Crop Reference Price Nat. Loan Rate
Corn $3.70 $1.95
Soybeans $8.40 $5.00
Wheat $5.50 $2.94
Ag Risk Coverage County Program (ARC-CO)
ARC-CO payments are made when the ARC-CO Actual Revenue is less than the ARC-CO Guarantee (86% of the Benchmark Revenue) for a covered commodity:
The payment rate can be no higher than 10% of the ARC-CO Benchmark Revenue for the covered commodity.
Payments are made regardless of the planting of the covered commodity.
ARC-CO Benchmark Revenue is calculated by multiplying the 5 Year Olympic Average County Yield by the 5 Year Olympic Average Price.
5 Year Olympic Average Yield is the higher of the County Yield for the crop or 70% of the County Transitional Yield (70%T).
5 Year Olympic Average Price is the higher of the Marketing Year Average (MYA) price of the National Loan Rate for the covered commodity.
ARC – CO Actual Revenue is calculated by multiplying the Actual County per acre yield by the higher of the Marketing Year Average (MYA) price or the National Loan Rate for the covered commodity
Ag Risk Coverage Individual Program (ARC-IC)
ARC-IC payments are made when the ARC-IC Actual Revenue is less than the ARC-IC Guarantee (86% of Benchmark Revenue) for ALL covered Commodities on ALL farms enrolled in ARC-IC in the state for the producer.
The payment rate is the difference in the ARC-IC Guarantee and the ARC-IC Actual Revenue, but can be no higher than 10% of the ARC-IC Benchmark Revenue for all covered commodities on the farm.
Payments are made on 65% of the base acres of all covered commodities on the farm.
Only farms enrolled in ARC-IC each year are included in the ARC-IC revenue calculations.
Current year planted acres and production are used to determine both ARC-IC revenues and production.
Planting of covered commodities is required to receive an ARC-IC payment.
Production reports of covered commodities are required each year for farms enrolled in ARC-IC.
STEP 3: ENROLLMENT PROCESS:
Once Election has been completed then Enrollment takes place. Enrollment for crop years 2014 and 2015 is anticipated to take place between Mid-April 2015 through the Summer of 2015.
Enrollment will be completed for each crop year 2014-2018, and producers can participate or not participate on a year-by-year basis.
Common Themes for all Three Programs (PLC, ARC-CO, & ARC-IC)
Farms that have 10 base acres or less cannot receive a payment, EXCEPTION: Socially Disadvantaged or limited resource farmers are eligible for payment on these farms.
Acreage Reporting is required to be eligible for ARC/PLC payments (similar to past programs).
Conservation Compliance is required for participation in any of the three programs.
2014 payments (if earned) will be issued after October 1, 2015 for all three programs.
2015 – 2018 payments are issued after MYA prices are determined and after October 1 of the subsequent year.
$125,000 payment limitation per SS#.
Individuals or entities with Average Adjusted Gross Income (AGI) greater than $900,000 will be eligible for payments (average AGI for preceding three complete taxable years).
Pezzuolo Insurance Agency