1. 2014 FARM BILL: COLLABORATION AND EDUCATION STRATEGIES Jody Campiche Oklahoma State University

2. 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

3. Decision Aid Effectiveness

4.  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

5.  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

6.  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

7.  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

8. 2014 Farm Bill: Extension Education

9.  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

10. Eliminated Programs

11. 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

12. Commodity/Crop Insurance Programs CROP INSURANCE COMMODITY PROGRAMS

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

14. 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

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

16. 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?

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

18. Plant a different crop than base crop

19. 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

20. 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

21. 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)

22. Base Update  Reallocate base acres?  Cannot increase base acres, but can reallocate current base acres  Reallocation based on 2009-12 planted and prevented planted (and double crops if an approved practice)

24. Base Reallocation Example 2009201020112012 Corn00200 Grain Sorghum15010000 Wheat250300200 Totals400

26. Yield Update Updated payment yield = 90% of the average of the yield per planted acre for the 2008-2012 crop years Exclude any year when no acreage was planted to the covered commodity Will likely use crop insurance APH yield data for 2008- 2012  Producers with yields in any of the 2008-2012 years that are < 75% of the county average yield can use 75% of the 2008- 2012 county average yield as a substitute

27. Yield Update Example  Wheat CC yield = 35 bu  Garfield Co., OK: 75% of 2008-12 yield = 24 (75% of 24 = 18) 20082009201020112012Avg Yield 90% of Avg Yield Wheat45154210433531 75% Avg Garfield County Yield 24

28. 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

29.  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

30.  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

31.  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

32. 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

33. 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)

34. 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?

35. Decision Tools – Many Options

36. SCO Decision Tool – Winter Wheat

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

40. Results

43. Questions? Jody Campiche jody.campiche@okstate.edu http://agecon.okstate.edu/agpolicy/ 405-744-9811