2014 FARM BILL: COLLABORATION AND EDUCATION STRATEGIES Jody Campiche Oklahoma State University

Disclaimer  This information is based on my understanding of the 2014 farm bill  Some details may be slightly different once the final rules and regulations are released  This information is intended to be for educational purposes only

Decision Aid Effectiveness

 For the 2008 farm bill, OK had one of the highest ACRE enrollments in the nation  A large extension effort focused on educating producers on ACRE and developing an Excel-based decision tool to assist producers with the decision  Based on feedback from producers and extension educators across the state, the decision tool was extremely helpful in the decision process Decision Aid Effectiveness: Oklahoma Experience

 1. Presentations covering the basics of each program (for producers and extension educators)  2. Decision tool available via the web or through county extension educators  3. Extension educator training on the decision tool  4. Producer meetings to discuss how to use the tool, information needed, and specific scenarios relevant to the area  5. Producer workshops (with portable computer lab) to assist with entering data into the tool Decision Aid Effectiveness: Oklahoma Experience

 Availability of decision tools is important  Need options to obtain extra help (county educators, producer workshops, etc…)  Want to see specific examples for their area  Of course results will vary by farm (crop mix, farm size, yields, etc…)  Easier for producers to understand if they can see some examples similar to their operations Producer Feedback: Farm Bill Extension Programs

 What do producers want to know?  Which programs provide the best safety net?  Which programs provide the highest payments First year of sign-up Life of the farm bill Producer Feedback: Farm Bill Extension Programs

2014 Farm Bill: Extension Education

 Educate producers/landowners/bankers on the differences between past programs and new programs  New programs are similar to previous programs – key differences  Emphasize the interaction between commodity and crop insurance programs and the increased complexity  Start with the details of each program  Provide examples (representative farms for the area) of how each program works  Provide examples comparing previous programs to current programs (such as the differences between ACRE and ARC) Extension Education

Eliminated Programs

Changes to Commodity/Crop Insurance Programs  Elimination of direct payments, countercyclical payments, ACRE payments, and SURE payments  One time election of:  Price loss coverage (PLC)  Agricultural risk coverage (ARC) – county or individual  If landowners/tenants don’t reach agreement, no payments for 2014 crop and automatically enrolled in PLC for 2015  New supplemental crop insurance program (SCO) for PLC participants  New supplemental crop insurance program (STAX) for cotton producers

Commodity/Crop Insurance Programs CROP INSURANCE COMMODITY PROGRAMS

Commodity Program/Crop Insurance Choices for Covered Commodities  PLC  PLC + SCO  ARC-County  ARC-Individual  RP, RP-HPE, YP changes?

2014 Farm Bill  One-time decision to reallocate base acres  **total base acres cannot increase (will be the same as on Sept. 30, 2013)  One-time decision to update CC yields on a farm

Decisions at the FSA office  Update base acreage?  Update FSA payment yields?  Enroll each crop/farm in ARC or PLC?

Decisions at the crop insurance office  Purchase SCO for 2015?  If the crop/farm is not in ARC  SCO is a county-level product SCO only pays if the county has a loss but the premium is much cheaper than an RP policy If the drought continues, is it likely that both the individual farm and county will have a loss?

SCO Covered Commodities: 2015 crop year  Corn  Cotton  Grain sorghum  Rice  Soybeans  Spring barley  Spring wheat  Winter wheat

Plant a different crop than base crop

Payment Acres ARC/PLC paid on base acres Do NOT have to plant to receive ARC/PLC on base acres (not including cotton base acres) PLC calculation uses the FSA payment yield

Price loss coverage (PLC)  Similar to the CCP in the 2008 farm bill  Payments when price falls below the reference price Does not account for yield loss  Payments tied to base acreage and FSA program yields

Agricultural Risk coverage (ARC)  Similar to the ACRE program in the 2008 farm bill  Key Differences  Paid on base acreage, not planted acreage  Tied to county or farm yield (ACRE tied to state yield)  Limited to 10% of the benchmark revenue (lower payments than ACRE)

Base Update  Reallocate base acres?  Cannot increase base acres, but can reallocate current base acres  Reallocation based on planted and prevented planted (and double crops if an approved practice)

Base Reallocation Example Corn00200 Grain Sorghum Wheat Totals400

Yield Update Updated payment yield = 90% of the average of the yield per planted acre for the crop years Exclude any year when no acreage was planted to the covered commodity Will likely use crop insurance APH yield data for  Producers with yields in any of the years that are < 75% of the county average yield can use 75% of the county average yield as a substitute

Yield Update Example  Wheat CC yield = 35 bu  Garfield Co., OK: 75% of yield = 24 (75% of 24 = 18) Avg Yield 90% of Avg Yield Wheat % Avg Garfield County Yield 24

Important Points  The decision to enroll in ARC/PLC varies by crop, region, farm size, etc…  SCO may not be an attractive option for some crops/regions/farms

 ARC/PLC paid on 85% of base acres  SCO paid on 100% of planted acres  No premium for ARC/PLC  Premium for SCO  Payment limits for ARC/PLC  No payment limits for SCO  ARC limited to 10% of benchmark revenue  PLC/SCO may have higher limits than ARC Important Points

 SCO not available for all crops for 2015  Some producers have base but are not planting a crop  Some producers have a higher level of coverage on their individual policy so SCO is less attractive  Some producers plant more than their base so SCO may be more attractive Important Points

 Interaction between programs  Choices will all take place at different times  This may be particularly confusing for ARC/PLC and SCO No SCO for 2014 crop year SCO sign-up for the 2015 crop year will occur before ARC/PLC sign-up for the 2014 crop year (for fall planted wheat) Farm Program Choices

SCO: Slightly Confusing PLC/ARC Details  Example 1  Producer has 100 acres wheat base and enrolls the wheat in ARC – plants 100 acres of wheat – CANNOT enroll wheat in SCO  Example 2  Producer has 100 acres of wheat base, enrolls the wheat in ARC - plants 100 acres of corn – CAN enroll the corn in SCO

Payment Timing  2014/15 ARC/PLC payments – will receive around October 2015  2015 SCO payments – may not receive until Spring 2016 (when county yields are final)

SCO/RP/YP/ARC/PLC Decisions  Is SCO offered for the crop/county?  Is ARC a better option for the crop/farm?  Is the base acreage different than current planted acreage?  Will the producer reallocate base acreage?  What is the current RP/YP coverage level?  What is the cost of higher RP/YP coverage vs adding SCO?  Does the producer have enterprise units?  Is the producer planting a large amount of acreage over your base?

Decision Tools – Many Options

SCO Decision Tool – Winter Wheat

OSU/KSU Farm Bill Decision Tool Jody Campiche Eric DeVuyst Oklahoma State University Art Barnaby Mykel Taylor Kansas State University

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