Two critical 2014 farm bill deadlines are approaching fast, and Mississippi State University experts encourage producers to take action now.
Landowners must update yield history and reallocate base acres by Feb. 27. By March 31, producers must decide between two new programs designed to help manage risk: Agricultural Risk Coverage, known as ARC, and Price Loss Coverage, known as PLC.
“Now is the time for landowners to update base yields and reallocate base acres, which will be in place for at least the next five years,” said Keith Coble, an agricultural economist with the Mississippi Agricultural and Forestry Experiment Station and MSU Extension Service. “Additionally, landowners have a one-time choice to convert their cotton base to a generic base and participate in cotton transition payments for 2014.”
Risk management skills matter a lot in light of the new legislation, Coble said.
“This farm bill invested additional funding into crop insurance, placing considerable emphasis on risk management,” Coble said. “That means producers need to understand their risk and the option to manage it.”
Coble said producers must choose between PLC and ARC, which can be either county- or farm-triggered.
The ARC program is designed to assist farmers when revenue drops because of low prices or weather disasters.
“ARC is a shallow-loss product; it covers a narrow band. It is a supplement to crop insurance,” Coble said. “If there is a catastrophe where all yield is lost, it will need to be an area-wide disaster. If there is a drought and the yields for the county are low, then ARC is going to pay for the revenue lost between 86 and 76 percent, and producers are going to need crop insurance to protect the rest of it.”
The PLC program is designed to assist farmers when commodity prices drop below reference levels, said Barry Barnett, an Experiment Station agricultural economist.
“PLC payments are based strictly on price,” Barnett said. “Payments are made when the marketing year average price for the commodity falls below the reference price stated in the farm bill.”
Barnett encouraged producers to be proactive and meet the impending deadlines.
“With each of these decisions, there is a default, so if producers don’t make a decision, it will default to a decision for them,” Barnett said. “If producers don’t update program yields or reallocate bases, the status quo will remain in effect for the farm. The default coverage is PLC, so producers will need to select ARC if that’s what they want.”
Both experts encourage producers to take advantage of the educational seminars provided by MSU Extension Service agricultural economists.
A total of six workshops will occur throughout Mississippi in February, providing insight into topics related to the new farm bill. An interactive video session is scheduled for Feb. 16. Seminar topics include ARC, PLC, supplemental coverage option, stacked-income protection plan, farm bill analysis and decisions aids. Visit http://goo.gl/1Xo7Qw for more information.