Showing posts with label FSA. Show all posts
Showing posts with label FSA. Show all posts

Friday, February 6, 2015

Farm Bill Deadline Nears


Deadlines are nearing for decisions farmers need to make to comply with provisions of the new farm legislation, Keith Coble reminded peanut producers at the annual meeting of the Mississippi Peanut Growers Association in a recent interview with Delta Farm Press.

“You have until Feb. 27 to update yield history and/or reallocate base acres,” he said. “You have until March 31 to make a one-time choice between ARC (Agricultural Risk Coverage) and PLC (Price Loss Coverage) for crop years 2014 through 2018. From mid-April through summer 2015, you can sign contracts for 2014 and 2015 crop years.”

Coble, who is Giles Distinguished Professor of Agricultural Economics at Mississippi State University, served as chief economist for the minority staff of the Senate Agriculture, Nutrition and Forestry Committee during the 2013/14 farm bill debate.

He notes that help is available to producers from MSU’s Agricultural Economics Department in the form of spreadsheets that can be used in making the calculations (http://bit.ly/1tW5dLl). “You can plug in your own circumstances and figure out how it will work for you.”

Coble says also  that the Mississippi Farm Service Agency has been “very cooperative in providing knowledgeable people to go to meetings and bring farmers up to speed on these provisions.” And he and other Mississippi Extension specialists have been on the meetings trail for the past few months.

Among the things farmers need to keep in mind about the new legislation, he says:

• “You can’t build base. If you have 200 acres of base on a farm serial number for a particular set of crops, when you get done you’re still going to have 200 acres of base. You can’t build it, but you can reallocate it.

• “Yield updating is probably one of the big no-brainers. Because of past programs and the inability to update base yields, we have a lot of farmers who have relatively low base yields. You now have the opportunity to take 90 percent of the 2008-2012 average, and in a lot of instances that will be a higher number. I would suggest you take a look at that.”

• PLC program: “The peanut industry and rice industry wanted a traditional price-triggered program however a price-triggered program was created for all program commodities. The corn reference price is $3.70, and the Congressional Budget Office said that would cost almost nothing — now look where corn prices are.”

In terms of ARC versus PLC, Coble says, “for rice and peanut farmers most analyses suggest PLC. I’d think really hard before I chose ARC on either of these crops. But for beans, corn, and wheat, it depends on what you think the price path is.

Decisions on ARC/PLC

Beans still look pretty favorable toward ARC; for corn, it’s more of a toss-up with an slight edge to ARC in most cases. In Mississippi, we have some counties that have a pretty good history with ARC, and others that don’t, so look at your own county.”

Farmers also need to keep in mind, he says, that “you can be in the PLC program and SCO (Supplemental Coverage Option), but if you’re in the ARC program you can’t purchase SCO insurance.

“The two versions of the ARC program are a shallow loss revenue program. The county-triggered program is commodity specific and pays on 85 percent of base acres. The area-triggered program is paid on 65 percent of base acres, and it is going to lump your farm serial numbers together and it’s going to be across all your commodities.”

While the farm level ARC program was designed for wheat farmers in Montana, Coble says, “I could envision a few cases in Mississippi where someone has one farm serial number and is only growing one crop. This is a scenario where individual ARC might work.”

It’s also important to understand, he says, that with ARC, “rather than a fixed legislative target, it uses an olympic average on yield and price. Take the last five years, drop the high and the low, and average the other three.

We were at pretty high commodity price levels when this bill was written; now we’re at lower price levels for several crops. What we’re going to see is that ARC will likely ride these price levels down.  We’ve got a lot of upward-trending yields, so it’s going to move in the opposite direction.”

SCO is very similar to ARC, he notes. “It’s a shallow loss insurance product, delivered by RMA (Risk Management Agency), with a premium subsidy of 65 percent of the total. The top coverage level is 86 percent, the same as ARC. For these products, RMA is moving toward using their own data rather than NASS county data for these yield series. It will be interesting to see how it works.

“You may purchase either STAX (Stacked Income Protection Plan) or SCO on cotton. STAX is just for cotton and is very similar to SCO, but has a higher premium subsidy — an 80 percent subsidy and a 90 percent guarantee. I think a lot of cotton producers will prefer STAX to SCO.”

Crop insurance coverage levels in Mississippi “have been going up fairly rapidly,” Coble says. “I thought we were catching up with the Midwest, but I was wrong. They’ve been moving to higher coverage (75 percent to 85 percent) and the primary reason for it is enterprise units — growers have gone to enterprise units in order to get higher coverage.

Switching for more benefit

The higher percentage the subsidy, the more benefit you get. That’s why I think we’ve got a lot of people switching from basic units to enterprise units. However, with enterprise units, you’re going to have some offsetting losses. If you’ve got a low yield field with a yield loss, and another field that doesn’t, they’ll be averaged together.

With SCO, Coble says, “You’re topping off an individual coverage policy with an area trigger policy. In the past, you were never able to buy two insurance policies on the same acre — now you can. They’re intended to cover layers of loss. You can have two policies insuring the same acre.

“The ARC program, an FSA-delivered program, is doing much the same thing as SCO, but it’s not tied to the crop insurance choice you make. So, you can buy a coverage level that doesn’t match up to ARC, or you can buy a coverage level that laps over into the ARC range.”

As decision times near, Coble says, “I would suggest you ask your crop insurance agent five questions:
1.    Can you give me a quote for enterprise units and trend adjusted yields?
2.    Will you show me the premium for different coverage levels?
3.    What about topping off individual coverage with SCO?
4.    Will you give me a quote for separate coverage levels by practice?
5.    What about the APH (Actual Production History) yield exclusion?”

And he cautions, “There is a lot of bad information out there. Be very careful about using information from the Midwest to make decisions here in the South.

Questions growers “need to be asking” about the ARC/PLC issue, Coble says:
1.    How much do you want to protect yourself from risk or increase government payments? “Are you trying to protect yourself from risk, or are you trying to get the most money from the government?”
2.    How much do you value having a price floor under the price of a crop? “If you sleep better at night when you’ve got a $3.70 floor under your corn, then take the PLC program, even though ARC might pay you more money. We don’t know what these programs are going to pay you in 2018. It’s just a guess.”
3.    How much are you willing to depend on individual crop insurance for risk protection?
4.    How much are you willing to depend on area-triggered crop insurance for risk protection? “Remember that area-triggered programs may not trigger when your farm has a loss. It’s not about whether your average yield is higher or lower — it’s about whether the county yield is low when your yield is low.”
5.    How much are you going to worry about relatively small commodity program payments versus controlling cost?

Some “easy calls” for producers, Coble says, will be conversion of cotton base to generic base and yield updates. He notes that farm level ARC “may not be a good fit” for diversified producers, and says STAX will likely be preferred over SCO for cotton unless crop insurance coverage is low.

Among important things to remember: “Area-triggered programs may not trigger when you have a loss. Title 1 programs are on base acres, not planted acres. And, compared to direct payments which are paid every year, ARC, PLC, and SCO are expected to pay less than 50 percent of the time.”

Friday, December 5, 2014

FSA Meets Farm Bill Target


$100 million is a lot of money, even by government standards. But, by the time it’s all said and done, there’s one $100 million amount that farmers will more than likely agree was money well spent.

This $100 million is the money Congress provided in the Agricultural Act of 2014 to help USDA get the word out to farmers about the many new provisions in the 2014 farm bill and how they differ from those of the 2008 law.

Using those funds, USDA has held more than 2,000 farm bill education meetings since August. Some were training sessions for FSA county office employees, but the majority were meetings held by county FSA directors to introduce the new insurance-oriented Title I safety net programs to farmers.

USDA also contracted with Texas A&M University’s Agriculture and Food Policy Center, the University of Missouri’s Food and Agricultural Policy Research Institute and the University of Illinois to develop decision aid software that allows producers to plug in their information and determine how different farm bill decisions will impact them.

Land-grant university personnel are working with farmers on how to use the new software.
“Many farmers have just finished harvest, and now they’re turning their attention to the farm bill,” says Val Dolcini, administrator of the Farm Service Agency. “We’re trying to do everything we can to make sure they have all the information they need to make good decisions.”

Dolcini, interviewed by telephone from Nashville, Tenn., where he was attending a national FSA employee farm bill training conference, agreed with an oft-repeated expression that it will take more than one meeting for many producers to fully understand the many options available under the Agricultural Act of 2014.

“It is complicated, and I think many farmers may need to hear the information from more than one source,” said Dolcini, who served as state executive director of the California Farm Service Agency before assuming the top FSA post in September. “That’s why we have partnered with the land-grant universities at most of our farm bill education meetings.”

Dolcini said FSA employees have overcome a number of challenges since President Obama signed the 2014 law in February, working through a number of issues to get to the point where they are now signing up farmers for the new programs.

“Our first step was to roll out the Livestock Forage Disaster Program, which was designed to help producers who had experienced livestock losses from droughts, floods and blizzards,” said Dolcini. “Then, in September, we launched the Dairy Margin Protection Program to provide help for dairy farmers.” (Dolcini visited a dairy farm in Orlinda, Tenn., to discuss the MPP-D program while in Tennessee.)

Farm Service Agency personnel just completed the signup for the Cotton Transition Assistance Program, a program that will provide about 5 cents per pound to producers who will not receive a direct payment or insurance payment in 2014.

And since Sept. 29, they have been working with landowners on updating yield history or reallocating base acres and, since Nov. 17, signing farmers up for the Agricultural Risk Coverage or ARC or the Price Loss Coverage (PLC) programs. Signup for updating yields or reallocating base acres ends Feb. 27, 2015 and for ARC or PLC ends March 31, 2015.

“These are very serious decisions for farmers,” said Dolcini. “When growers sign up for ARC or PLC, they’re committing their operations to those programs from 2014 to 2018. Our county FSA employees cannot provide advice to growers on what they should do, but they will provide all the assistance they can.”

Enrollment in the new, complicated farm bill comes at a time when FSA and USDA have fewer full-time employees (FTEs) and reduced funding for general operations. As a result, FSA has been consolidating county offices and reducing FTEs where possible. Tennessee, for example, now has 59 county offices instead of an office in each of its 95 counties.

“We’ve been able to make good use of temporary employees to stay on schedule for farm bill implementation,” said Dolcini. “We’re having them do some of the paperwork and freeing up full-time employees to handle the more complicated tasks and work with farmers.

“I won’t say it hasn’t been challenging, but we have a great group of employees, and they’ve been working very hard to keep us on schedule.”

For more information on the remaining deadlines for signing up for 2014 farm bill programs, see http://www.fsa.usda.gov/FSA/printapp?fileName=nr_20141002_rel_0161.html&newsType=newsrel

Friday, August 29, 2014

Enrollment for Dairy Risk Management Program Begins Sept. 2nd.

Starting Sept. 2, 2014, farmers can enroll in the new dairy Margin Protection Program. The voluntary program, established by the 2014 Farm Bill, provides financial assistance to participating farmers when the margin – the difference between the price of milk and feed costs – falls below the coverage level selected by the farmer.
The U.S. Department of Agriculture (USDA) also launched a new Web tool to help producers determine the level of coverage under the Margin Protection Program that will provide them with the strongest safety net under a variety of conditions. The online resource, available at www.fsa.usda.gov/mpptool, allows dairy farmers to quickly and easily combine unique operation data and other key variables to calculate their coverage needs based on price projections.
The Margin Protection Program, which replaces the Milk Income Loss Contract program, gives participating dairy producers the flexibility to select coverage levels best suited for their operation. Enrollment begins Sept. 2 and ends on Nov. 28, 2014, for 2014 and 2015. Participating farmers must remain in the program through 2018 and pay a minimum $100 administrative fee each year. Producers have the option of selecting a different coverage level during open enrollment each year.
Dairy operations enrolling in the new program must comply with conservation compliance provisions and cannot participate in the Livestock Gross Margin dairy insurance program. Farmers already participating in the Livestock Gross Margin program may register for the Margin Protection Program, but the new margin program will only begin once their Livestock Gross Margin coverage has ended.
The 2014 Farm Bill also established the Dairy Product Donation Program. The program authorizes USDA to purchase and donate dairy products to nonprofit organizations that provide nutrition assistance to low-income families. Purchases only occur during periods of low dairy margins. Dairy operators do not need to enroll to benefit from the Dairy Product Donation Program.

Visit FSA online at www.fsa.usda.gov/factsheets, or stop by a local FSA office to learn more about the Margin Protection Program or the Dairy Product Donation Program.

Tuesday, April 1, 2014

What To Do With Uninsured Crops


The non-insured crop disaster assistance program (NAP) is a federally funded program that helps producers reduce their risk when growing foods and fiber crops, specialty crops and crops for livestock feed.  These benefits are only available for crops for which the catastrophic level of crop insurance is not available.  Application for coverage must be filed by the applicable crops application closing date.

Production levels for all crops must be reported to the FSA no later than the acreage reporting date for the crop the following year.  FSA requires any production reported in a loss year be verifiable according to Agency specifications.  NAP losses must be reported within 15 days of the loss became apparent.

All applications for NAP payment must be signed by the subsequent crop year's acreage reporting date in order to be considered timely.  There are no late file provisions for NAP applications for payment.

Contact your local FSA County Office for more information on the NAP program and for NAP application closing dates for specific crops.

Friday, March 28, 2014

Farm Loan Program Changes


Changes to FSA regulations have resulted in changes to both the Direct and Guaranteed Loans available through FSA.  The new regulations have removed Guaranteed Operating term limits.  Previous and current guaranteed loan borrowers who were not eligible for further guaranteed loans due to the previous 15 year eligibility term limit may now be eligible for further guaranteed loans through their commercial lender.

Also, the interest rate was reduced on Direct Loans where FSA provides 50 percent or less on jointly financed purchases of real estate also called Direct Farm Ownership Participation Loans.  The interest rate is currently 2.5%, but is subject to change.

Friday, March 7, 2014

FSA Helps Beginning Farmers


If you're a new farmer or someone looking to get into the farming business the FSA has a loan program for beginning farmers to help get them started.  The FSA can provide financing to eligible applicants through either direct or guaranteed loans.  So what makes an applicant eligible?

FSA Beginning Farmer Loan Qualifications


  • Has operated a farm not longer than ten years. 
  • Will materially and substantially participate in the operation of the farm.
  • Agrees to participate in a loan assessment, borrower training and financial management program sponsored by the FSA.
  • Does not own a farm in excess of 30 percent of the county's median size.
To learn more just go to your local USDA office or go to FSA.gov to learn more.