Farm Bill: Questions & Answers
December 20, 2002
By Kent Thiesse
University of Minnesota
Extension Farm Management
As of Oct. 1 landowners have a one-time opportunity to make a six year (2002-2006) decision on base acreage for the new Farm Program. These base acres will be used to calculate all "direct" and "counter-cyclical" payments for all eligible commodities in the new Program. Many County Farm Service Agency (FSA) Offices have already held already held Informational meetings. Many more meetings are being planned in the coming weeks. All landowners and farm operators are strongly encouraged to attend one of these FSA Informational Meetings. The choices in the new Farm Program are significantly different than details of previous Farm Programs.
Following are a series of questions and answers that have surfaced from producers and landowners regarding Base Acre decisions in the new Farm Program:
Q: What mailings have been sent out to landowners and farm operators regarding sign-up for the new Farm Program?
A: The first mailing sent out by County FSA Offices lists all current "Production Flexibility Contract" (PFC) acres for each program crop from 1996-2002, and also lists the planted crop acreage that was reported to County FSA Offices in 1998-2001. This data will determine the eligible crop base acres for the new "Direct and Counter-Cyclical Payment" (DCP) Farm Program for the next six years (2002-2006).
The second mailing lists eligible crop base acres under each of the five Base Acre options of the DCP Program and the established payment yields that will be used for payment calculation. It also provides details for Farm Program sign-up details.
It is extremely important for all landowners and farm operators to read all lettersand notices from County FSA Offices very carefully, to abide by deadlines, and to contact the FSA Office for clarifications.
Q: What are the five Base Acreage options in the new DCP Program?
A: The five Base Acreage options are as follows :
1.Retain all existing (2002) PFC base acres, and do not add any soybeans or oilseeds as base acres for the new DCP Program.
2.Retain all existing PFC base acres, and add soybeans and oilseeds as new DCP base acres, up to the allowable acres. (Max. PFC; Min. Oilseeds.)
3.Retain some existing PFC base acres, and add the maximum allowable soybean and oilseed base acres according average planted acres for 1998- 2001. A "PFC offset" would be used to reduce existing PFC crop base acres, if necessary. (Total crop base acres can not exceed cropland acres.)
4.Eliminate all existing PFC base acres, and use an average of 1998-2001 planted acres to establish base acres for all commodities. This is the only base acre option that allows for updated payment yields to be used for calculating potential "counter-cyclical" payments.
5.Retain some PFC base acres, and add some soybeans and oilseed base acres, using a partial "PFC offset". (Between Options 2 and 3.)
Q: Is it possible to establish a crop base for the DCP Program on a farm that has never been enrolled in the Farm Program ?
A: Yes. Landowners in this situation must use Option 4 for base acreage in the new Program. The eligible base acres for each commodity will be determined by the average planted acres on that farm from 1998-2001.
Q: If a producer currently has a low corn base and wants to increase it, what options are available ?
A: Option 4 is the only base acreage option that would allow for increases in existing PFC crop bases. The corn base acreage could be increased if the average planted corn acres from 1998-2001 were higher than the existing PFC corn base.
Remember, the landowner makes the base acreage decision, so if the producer is not the owner, they could not make this decision.
Q: If I purchase or cash rent a new farm, are the crop base acres transferable?
A: Yes. Since the base acreage and yield decisions are made by farm owners, any previous PFC crop bases, 1998-2001 average planted acres, and existing PFC payment yields are transferred to the new owner or operator. If a new landowner or producer wants to get data for "proven yields" to be used to establish soybean yields or for updated payment yields in Option 4, they must secure this information from the previous landowner or farm operator.
Q: Is it possible to have more crop base acres than cropland acres?
A: No. Total crop base acres in the new DCP Program can not exceed the allowable cropland acres on that "farm unit" (or farm ). This is why a "PFC offset" was used in base acre Options 3 and 5 to reduce eligible base acres. Also, crop acreage planted to non-program crops such as alfalfa, vegetable crops, etc. from 1998-2001 reduces the eligible crop base acreage for the DCP Program. (Example On a 150 acre "farm unit", with average planted acres from 1998-2001 of 50 acres corn, 50 acres soybeans, and 50 acres alfalfa, the eligible crop base acres with all five options of the DCP Program would be 100 acres, because alfalfa is not a program crop.)
Q: Do all landowners have to agree on a base acre decision for a "farm unit" ?
A: Yes. Many parcels of land have been combined into one "farm unit" at County FSA Offices, and since sign-up for the new DCP Program is by "farm unit", all landowners in that "farm unit" would have to agree to and sign-up for the same base acreage option. The farm operator will not be able to receive the new DCP payments on that "farm unit" until all landowners have signed.
Q: Is it possible to separate out a land parcel from an existing "farm unit?"
A: Yes. Eligible, individual farms may be divided out from a larger "farm unit" through "reconstitution" at County FSA Offices. This could be helpful in situations where all landowners do not agree on the preferred base acre option for the new DCP Program or in situations where there might be some economic advantage to separating out individual farms before the base acreage and payment yield decision. Be cautious before agreeing to separate out individual farms from a larger"farm unit", because the farm separation may affect eligibility for planting fruits and vegetables (peas and sweet corn) in the future without penalty . Check with the FSA Office for details.
Q: Are existing "Power-of-Attorney" (POA) forms at County FSA Offices still valid with the new DCP Program?
A: No. All existing POAs will no longer be valid for the new DCP Program and new POAs must be obtained before an affected "farm unit" can be enrolled in the DCP Program. Contact the County FSA Office for details.
Q: What are the sign-up dates for the base acre and payment yield decisions in the new DCP Program?
A: Sign-up for the Base Acre and Payment Yield Options in the new Farm Program at County FSA Offices began on October 1st, 2002, and continue through April 1st, 2003. This means that landowners and farm operators do have some time to decide on the five base acreage options and to get documentation together for updating payment yields. If no base acreage option has been selected for a "farm unit" by April 1st, 2003, the farm will default to keeping all existing PFC crop base acres and adding eligible oilseed base acres. (Option 2).
Q: Are updated payment yields used for all payment calculations in the new DCP Program ?
A. No. The updated payment yields, using 1998-2001 "proven yields", are only used to calculate potential "counter-cyclical" payments when base acre Option 4 is selected. (Using 1998-2001 planted acreage to update base acres.) Existing PFC payment yields are used to calculate "direct payments" for all base acre options.
Q: How will a soybean yield be established to use for calculation of "direct payments" and for "counter-cyclical" payments in base acre Options 2, 3, and 5?
A: The soybean yield will be the "proven yield" , based on 1998-2001 actual production evidence, times .78 (Example 45 bu. X .78 = 35 bu.). So, it is important for farm operators and landowners to document "proven yields" for soybeans, even if they do not plan to enroll in Option 4 of the DCP Program. If there is no "proven yield" documentation available, a "plug yield" which is 75 percent of the County average yield for 1998-2001 will be used and then multiplied by .78 (Example 44 bu. X .75 = 33 bu. X .78 = 26 bu.)
Q: Can LDP records now be used as documentation for "proven yields?"
A: Yes. As of early September, LDP and commodity loan records at County FSA Offices are now eligible documentation to use for "proven yields" to be used to calculate updated payment yields for the DCP Program, along with other acceptable yield documentation. Actual production information must be reported on Form FSA-658P, which is available from County FSA Offices. Landowners and farm operators must keep production evidence on file for all six years of the DCP Program (2002-2006). Several "farm units" will be audited each year by FSA.
Q: The five base acre options and updating payment yields seems complicated, where can I get help?
A. Attend County FSA Office Informational Meetings, read all mailings and newsletters from the FSA Office very carefully, and contact the FSA Office with specific questions regarding base acreage and payment yield decisions.Your County FSA Office is your best and most accurate information source.
Texas A & M University has developed a computer spreadsheet that analyzes the five base acre options for a "farm unit". This spreadsheet, other Farm Program Information Sheets, and access to the official USDA Farm Bill web site are available by accessing the University of Minnesota Extension Service Farm Bill web site.
The web site address is: www.extension.umn.edu/farmbill/.
Your County Extension Service Office is a good contact for getting more assistance with making the base acreage and yield decisions in the new Farm Program. Contact any local extension Office for further assistance.