The Agriculture act of 2014

I went to a meeting last week, sponsored by the National Cotton Council, Rolling Plains Cotton Growers, and PCCA.


This was our first look at the new farm program.  It is a 900 billion dollar program with the bulk being made up of the food stamp program, approximately 850 billion.  Needless say, the farm program took a pretty good hit.


Probably the most shocking fact that came out is that cotton is no longer a program crop.  No more DP (Direct payments), or CCP (counter cyclical payments).  The latter statement was expected news.


2014 will be a transition year, and all options will not be available for the program for this farm crop year.  Therefore a 5.4 cent/lb on all base acres and DP yields will be paid.  It extends to '15 at reduced rates for any counties for which STAX is not available.


I do not envy the FSA staff as this new program is going to call for a great deal of production history.


Yesterday I was in the FSA office re-certifying wheat acres after short rating all of our wheat acres.  In visiting with them, they said they are in a hold pattern waiting for the regulations to be written.  Once the regulations are written they will go back to congress for approval and be accepted as to intent or sent back to be re-written.  This could be a timely process.  Until the regulations are out, they are unable to train or do any of the preliminary work that it looks like will be required.


The County Executive Director told me what we learned at the meeting last week, 50% will be right and 50% will be wrong.


I guess it is the not knowing and speculation that has really worked on the producers.


It appears program sign up will not begin before late summer or early fall, and it could be as late as the end of the year or after harvest.


I don't know about you, but I don't know of too many businesses that can operate this way.  Talk about leap of faith, we are being asked to put a crop in without knowing what the rules and guidelines will be.


The safety net for cotton will now be through all risk crop insurance.  The STAX program or stacked income protection plan will not be available until the 2015 crop year.  Stax will be administered by USDA's RMA (Risk Management).  It will be on a county wide experience, not an individual experience.


Premium subsidy is at 80%, although coverage is available up to 120%  STAX may be purchased alone or in addition to the CAT coverage.  Irrigated ad non-irrigated practices are offered.


The other coverage is SCO or Supplemental Coverage Option.  It too will not be available until the 2015 crop year and cannot be purchased of cotton covered by STAX.  My understanding is this can be purchased to cover the producer's deductible.  Indemnities are triggered on the county yield or revenue experience depending on coverage.  SCO deductible is 14%, premium subsidy is 65%, triggers are if yield/revenue falls below 86%, adjusted based on the value of the individual producer's indemnity.  SCO coverage extends down to the underlying coverage.


Other crop insurance changes by '15 include enhanced options by enterprise units.  It makes permanent a higher premium subsidy, allows the enterprise unit coverage by irrigated and non-irrigated practices, as well as different coverage depending on practices.  Adjustments in APH insurable yields are coming.  It appears they will use a 20 year history and any year in ten year grouping the producer has the option to drop.  4 years minimum for APH.


One important thing is that the crop insurance subsidy bill is not tied to the farm bill, and the increases in subsidies are permanent.  Sequestration  is not applicable to  premium subsidy or indemnity.


I visited yesterday some with Memama's crop insurance agent and told him we were going to be relying on him a lot.


Upland Cotton marketing loan rate will be set by formula using the average of AWP (Adjusted World Price) of the two most recent marketing year.  Loan rate for base quality not less than 45 cents or greater than 52 cents


Loan rates for other commodities remain at 2013 levels.


Covered commodities will be wheat, feed grains, rice by type, pulse crops, soybeans, other oilseeds, and peanuts.


Producers will have  choice between price or revenue based programs


Base acres will be for covered commodities while generic  acres would be the cotton acres.    '13 cotton base acres will automatically be converted to generic acres and producers can choose to retain 2013 base acres or reallocate the bases.  Base history using '09-'12 planting history and allocation is for covered commodities only.


For covered programs a producer must choose between PLC or ARC.  If ARC is chosen planted acres for that commodity are ineligible for SCO.


The PLC (Price Loss Coverage is triggered when price falls below reference price.


ARC (Agriculture Risk Coverage) is triggered when actual crop revenue falls below ARC guarantees.


My understanding is that even though a producer allocates acres (or can) to covered crops, he or she can flex generic acres into base acres and vice versa in a given year.  However payment acres cannot exceed total base acres on a farm.


New, more stringent rules apply to defining actively engaged in farming, unless it is an operation comprised solely of family members.


Conservation compliance is required for eligibility.


That is it in a nutshell.  There are formulas and such that I didn't include.


Lots to digest before decisions are made that will remain in place for the duration of the farm bill.


You know, this is all well and good, and we finally have a new farm bill, but bottom line is rain.  I wish we didn't have to talk about safety nets and triggers.


FATHER, we ask for YOUR rain blessing.  This earth of yours is mighty thirsty.