1. 2014 Farm Bill Summary & Decision Aid Tool
Levi A. Russell
Assistant Professor & Extension Economist
Joe L. Outlaw
Professor & Extension Economist
Co-Director, AFPC
Coastal Bend Extension Training
September 24, 2014

2. 1234
Dallam
Joe Farmer
4567, 6789

3. FSA Crop History Summary
11/13/2018

4. We want actuals or the Rate YieldIn
We want actuals or the Rate Yield

5. Price Forecasts 21 Covered Commodities USDA FAPRI
Midsession review from this summer for
2013 and 2014 updated monthly from WASDE
Not sure about coverage
FAPRI
Special analysis done monthly after WASDE published
I have files for most crops from January and all 21 starting in July

6. Browser Compatibility
IE 9 or greater
Firefox
Chrome
Safari
If you update your computer regularly, you shouldn’t have a problem

7. Covered Commodities
Wheat, Oats, Barley, Corn, Grain Sorghum, Long Grain Rice, Medium Grain Rice, Pulse Crops, Soybeans, Other Oilseeds and Peanuts
Other Oilseeds
Sunflower seed, Rapeseed, Canola, Safflower, Flaxseed, Mustard Seed, Crambe, Sesame Seed, or any oilseed designated by the Secretary
Pulse Crops
Dry peas, Lentils, Small Chickpeas and Large Chickpeas

8. Yield Updating Year Corn Wheat 2008 DNP 30 2009 15 2010 22 2011 100
2012
150 32
75% T Yield 70 18
( )/2*.9 =112.5
( )/5*.9 =21.6
Could Update to:

9. Yield Updating Year Corn Wheat 2008 DNP 2009 2010 2011 2012 150
75% T Yield 70 18
150*.9 =135
18*0.9 = 16.2
Could Update to:

10. Base Reallocation One time base reallocation Two choices
Reallocate (cannot add base acres to a farm)
Retain existing base acres
Reallocates bases other than cotton that were on the farm as of September 30, 2013
Reallocation is in proportion to the ratio of:
The 4 year average of planted acres to each crop from 2009 to 2012 plus prevented planting/the 4 year average of all covered commodities planted plus prevent planting
Under planting does not affect the amount of base. The planted acres of covered commodities only affects the proportion of base acres that you will reallocate among commodities

11. Base Reallocation Example
Corn
Sorghum
Soybeans
Wheat
Total
Base
1,000
Plantings
2009
500
250
2010
2011
2012
Average
Share
50%
25% 0%
Reallocated Base
Source: House Agriculture Committee Staff

12. Base Reallocation Example With a Non-program Crop
Corn
Sorghum
Soybeans
Wheat
Alfalfa
Total
Base
1,000
n/a
Plantings
2009
600
100
200
2010
2011
2012
Average
Share
75%
12.5% 0%
Reallocated Base
750
125
Source: House Agriculture Committee Staff

13. Base Reallocation Example With Cotton
Cotton
Corn
Sorghum
Soybeans
Wheat
Total
Base a/
500
1,000
Plantings
2009
200
600
100
2010
2011
2012
Average
Generic Base
Share
75%
12.5% 0%
Reallocated Base
375
62.5
Source: House Agriculture Committee Staff

14. Cotton Base Becomes Generic Base
All Cotton base on the farm as of September 30, 2013 is renamed Generic Base
Upland cotton no longer receives traditional commodity program payments (other than loan protection against very low prices)
In an attempt to resolve longstanding WTO dispute with Brazil, the only income support upland cotton will receive is through purchased insurance
On an annual basis, generic base acres can be assigned to other covered commodities based on the number of acres planted of the other covered commodities
Example: 100 total acres on farm 50 acres of wheat base and 50 acres generic. If farmer plants 50 acres of wheat and 50 acres of sorghum they would have 75 acres of base for wheat and 25 acres of base for sorghum crops for that year. If planted all wheat then would have 100 acres of wheat base for that year. If planted all cotton then in Washington terms the generic base is idle for that year. (see following examples)

15. Generic Base 100 Acre Farm – Base Acres: 50 Wheat and 50 Generic
If farmer plants 50 acres of wheat and 50 acres of sorghum
Original Wheat Base
Allocated Generic Base to Wheat
Allocated Generic Base to Sorghum
Farmer has protection on 75 acres of wheat and 25 acres of GS

16. Allocated Generic Base to Wheat
100 Acre Farm – Base Acres: 50 Wheat and 50 Generic
If farmer plants 100 acres of wheat
Original Wheat Base
Allocated Generic Base to Wheat
Farmer has protection on 100 acres of wheat

17. Generic Base Idled for Year
100 Acre Farm – Base Acres: 50 Wheat and 50 Generic
If farmer plants 100 acres of cotton
Original Wheat Base
Generic Base Idled for Year
Farmer has protection on 50 acres of wheat

18. Allocated Generic Base to Wheat
100 Acre Farm – Base Acres: 50 Wheat and 50 Generic
If farmer plants 50 acres of wheat and 50 acres of cotton
Original Wheat Base
Allocated Generic Base to Wheat
Farmer has protection on 100 acres of wheat

19. Generic Base 100 Acre Farm – Base Acres: 50 Wheat and 50 Generic
If farmer plants 1 acre of wheat and 99 acres of cotton
Original Wheat Base
Generic Base Idled for Year
Allocated Generic Base to Wheat
Farmer has protection on 51 acres of wheat

21. Choice Between ARC and PLC
Flow Chart of Title I Producer Choices for Covered Commodities (Does Not Include Upland Cotton)
Title I
Title XI
County
Choose ARC
Crop Insurance
Choice Between ARC and PLC
Individual
Can choose to Update Payment Yield
Base Reallocation
Decision
Choose PLC
LANDOWNER DECISION
OR TENANT IF P.O.A.
LANDOWNER DECISION
TENANT (CASH)
OWNER/TENANT (SHARE)
Beginning in 2015 can choose SCO insurance option
This decision is on a crop by crop basis for each farm unless the producer chooses individual ARC then it is for all the crops
on that farm. If all parties cannot agree on a choice then the farm would not be enrolled in ARC or PLC for the 2014 crop
and the farm would automatically be enrolled in PLC for the 2015 crop and beyond.

22. Who Makes The Decisions?
Base reallocation
As soon as practicable after the date of enactment of this Act, the Secretary shall provide notice to the owners of a farm regarding their opportunity to make an election
Yield Update
At the sole discretion of the owner of a farm, the owner of a farm shall have a 1-time opportunity to update, on a covered commodity-by-covered-commodity basis, the payment yield that would otherwise be used in calculating any price loss coverage payment for each covered commodity on the farm for which the election is made.
ARC/PLC
What the bill says:
IN GENERAL.—The term ‘‘producer’’ means an owner, operator, landlord, tenant, or sharecropper that shares in the risk of pro- ducing a crop and is entitled to share in the crop available for marketing from the farm, or would have shared had the crop been produced.

23. Who Makes The Decisions? (Cont)
ARC or PLC
For the 2014 through 2018 crop years, all of the producers on a farm shall make a 1-time, irrevocable election to obtain—
(1) price loss coverage under section 1116 on a covered commodity-by-covered-commodity basis; or
(2) agriculture risk coverage under section 1117.
IN GENERAL.—The term ‘‘producer’’ means an owner, operator, landlord, tenant, or sharecropper that shares in the risk of pro- ducing a crop and is entitled to share in the crop available for marketing from the farm, or would have shared had the crop been produced.
This decision stays with the farm for the life of the farm bill

24. Guess at the Sign-up Timeline
August 2014
June
2015
Sept
Oct
Nov
Dec
Jan
Feb
March
April
May
Fix Planted Acres with FSA
Choice Between ARC & PLC
Reallocate Bases & Update Yields
Annual Sign-up
Wheat Signup (SCO Sept 30) Cotton Transition Pmt (Oct 7)

25. Ind. Coverage Indemnity
Crop
Insurance
Expected
Revenue
Example of
Price Loss
Coverage
(PLC)
Plus
SCO
How useful will SCO be?
Depends on the relative
size of the deductible and the cost
If buying 85% coverage level
not as exciting
Select counties for corn, soybeans,
wheat, sorghum, cotton, and rice starting with the 2015 crop year
Deductible
40%
Loss 14%
SCO Indemnity 26%
Insurance
Guarantee
Insurance Price X 10 Year Average (APH) Yield
Ind. Coverage Indemnity
Example:
60%
coverage
Actual
Price X
Yield +
Any PLC
Benefits

26. Producers applying for SCO for the 2015 winter wheat crop may withdraw coverage on any farm where they have elected, or where they intend to elect, ARC for winter wheat by the earlier of their acreage reporting date or Dec. 15, without penalty. This allows producers additional time to make an informed decision related to whether to elect to participate in either the ARC or Price Loss Coverage (PLC) programs for their winter wheat.
If producers withdraw SCO coverage for a farm by the earlier of their acreage reporting date or Dec. 15, they will not be charged a crop insurance premium. In order to withdraw coverage without penalty, producers must notify their agents of their intended election for ARC by the earlier of their winter wheat acreage reporting date or Dec. 15.

28. Flow Chart of Title XI Decisions for Upland Cotton
STAX
Coverage from 90% to 70% or underlying coverage level whichever is higher
Area-wide policy
Premium Subsidy – 80%
Protection Factor 80 to 120%
Loss and indemnity determined by county data
Choice of
STAX
with or without crop insurance or
SCO
with underlying insurance
policy
Can’t have both on same acres
SCO
Coverage from 86% to underlying coverage level
Area-wide policy
Premium Subsidy – 65%
Loss determined by county data, indemnity by individual APH

29. Illustration of Government Support for Wheat Under PLC
Insurance Base
Price – $7.02
Revenue per bu
86% of benchmark
Reference
Price – $5.50
Paid on base acres x .85
PLC
Loan
Rate – $2.94
MLG/LDP
Supplemental Coverage Option
Market Price
Market Receipts
Crop insurance coverage

30. Illustration of Government Support for Wheat Under ARC-County
Revenue per bu
Revenue Benchmark
86%
Revenue Guarantee
76%
[paid on base acres x .65 (individual) or
.85 (county)]
Loan
Rate – $2.94
MLG
Market Price
Market Receipts
Crop insurance coverage

31. Producer Price Outlook a Factor in ARC/PLC Decision (Corn Ex.)
Yields could also offset
FAPRI Price Projections

32. Producer Price Outlook a Factor in ARC/PLC Decision (Wheat Ex.)

33. Producer Price Outlook a Factor in
ARC/PLC Decision (Grain Sorghum Ex.)

34. Major Insurance Provisions
A new area-wide insurance program (SCO) will be available to all producers to purchase beginning in 2015 that is designed to protect them against losses that would normally fall within their insurance deductible range. Must have individual policy.
Up to 86% revenue guarantee. 65% premium subsidy
Makes enterprise unit discount permanent. Allows enterprise units to be split out for irrigated and non-irrigated crops.
Adjustment in actual production history to determine insurable yields.
A producer may choose to exclude any year from their APH if their yield in that year is less than 50% of the ten year county average. This also applies to contiguous counties and allows for the separation of irrigated and non-irrigated acres.
Must create a revenue policy for peanuts in time for the 2015 crop
Requires conservation compliance to receive premium subsidy
Don’t Count on This For Next Year
Enforcement Starts Next Year

35. Discussion of NAAFP Decision Aid
National Association for Agriculture and Food Policy (NAAFP) has been working on the decision aid for nearly 2 years
AFPC at Texas A&M
FAPRI at University of Missouri-Columbia
Applied for and received funding from USDA-FSA to develop nation-wide decision aid
Available today at:
Available soon on the USDA-FSA website
11/13/2018

36. Overview of NAAFP Farm Bill Decision Aid
Register as a producer or multi client user
address and password protect your data
address allows us to contact user when FSA changes rules or new price projections are available
Enter data for all FSA Farm and Tract Numbers
All Crops and their Practices by Tract number
Types not critical to FSA but important to RMA for SCO, STAX, and insurance
Analyze yield update, base reallocation, ARC-IC, ARC-CO, PLC, SCO, STAX, and insurance options
11/13/2018

37. Overview of NAAFP Farm Bill Decision Aid
Producers’ data are stored in the decision aid
Data accessed by a user name and password
We encourage producers to enter their data now and run the tool for each decision
Presently farmers should be using the tool to analyze Yield Update decision
Next farmers can consider the interaction between Base Reallocation and PLC, ARC-CO, ARC-IC Election
This decision should be tested with multiple price scenarios
Before final election, farmers can re-run the analysis to see if updated price outlooks in the Spring changed their preferences
11/13/2018

38. Preparation for Using NAAFP Decision Aid
Information needed for the Decision Aid are available from two primary sources
FSA Reported Commodity Crop History Summary (letter from FSA to producers, August 2014)
FSA farm number
Base Acres and CCP Yield for covered crops
Planted Acres
Crop Insurance Actual Production Report
Historical yields and planted acres
Ten years of yields preferred but is essential
11/13/2018

39. First Step Is to Register
11/13/2018

40. Producer data is Saved, Email to Notify Regarding FSA Updates
11/13/2018

41. Producer and Multi Client Users
11/13/2018

42. Create Client Records & Switch Clients
11/13/2018

43. Farm with Two Crops and One FSA Number
11/13/2018

44. Yield Update Analyzer
11/13/2018

45. Results for Yield Update
Producer can print the FSA Yield Worksheet
Print a separate form for each FSA number. Fill in the name and address for contact person, farm number, historical yields, state code, and county code.
11/13/2018

46. Select the Base Acre Reallocation & PLC/ ARC Decision Aid
11/13/2018

47. Base Reallocation Options Calculated Directly, Next Analyze their Impacts on Payments by Program
11/13/2018

48. Three Choices for Testing Alternative Price Scenarios
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49. Output for Base Reallocation, PLC, ARC-IC, and ARC-CO
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50. Whole Farm Decision: All Crops Elect the Same Program
11/13/2018

51. Crop-by-Crop Results for Each Program Election Option
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52. Crop-by-Crop Results for Each Program Election Option
11/13/2018

53. Crop Insurance Analysis Interacts with ARC/PLC+SCO
11/13/2018

54. Crop Insurance Analysis Interacts with ARC/PLC+SCO
11/13/2018

55. Crop Insurance Analysis Interacts with ARC/PLC+SCO
11/13/2018

56. Crop Insurance Analysis Interacts with ARC/PLC+SCO
11/13/2018

57. Crop Insurance Analysis Interacts with ARC/PLC+SCO
11/13/2018

58. Crop Insurance Analysis Interacts with ARC/PLC+SCO
Net revenue for the “best” combination of ARC/PLC and Insurance is presented. Result here is ARC, with Revenue Protection at 85%.
11/13/2018

59. Summary Decision Aid available on AFPC website since June 20th
More than 2,000 testers so far
Will be on FSA website when officially released
All 21 covered commodities plus cotton available in the official release version
Changes we expect after the official release:
Monthly updates of price projections by FAPRI
USDA price projections updates as available
Tool will be updated as FSA updates rules
Accessible by smart phones, tablets, iPads, anything that can access the internet
Helpdesk available 7 am to 7 pm after official release