With direct payment repealed in the 2014 Farm Bill, risk management for farmers is about to become very complex, with decisions to be made this year that will carry over for at least five years, possibly seven, Reece Langley, USA Rice senior director for government affairs, said Wednesday, March 5.
Langley; Lauren Echols, USA Rice manager for government affairs; and Dr. Eric Wailes, University of Arkansas Division of Agriculture, spoke Wednesday about the new Farm Bill to a full house at the Grand Prairie Center.
"I find this, certainly, one of the most complex and confusing pieces of legislation I have ever encountered, Farm Bill wise," Dr. Eric Wailes, University of Arkansas Division of Agriculture, remarked. "It is going to require considerable attention."
The presentations warned farmers about a bewildering array of plans, procedures and options, based on acreage allocations, from which farmers will have to choose for crop insurance. The decisions made this year will carryover for the next five to seven years.
With the 2014 crop year, farmers will have to choose between Price Loss Coverage (PLC), a price-based program, and Agriculture Risk Coverage (ARC) which is revenue-based.
Farmers, landowners will face a one-time choice to either keep current base acres or to reallocate to one of the covered commodities, based on planting from 2009 through 2012. Decision aids are being developed to help farmers in the process, Langley said.
Adding to the confusion, because of the settlement in the World Trade Organization (WTO) dispute with Brazil, cotton is no longer a commodity and as such is not eligible for either the ARC or PLC programs, Langley said.
"Because of that, Congress had to figure out a way to deal with all the cotton base-acres that that are going to be left on farms that really will have no value if they are not enrolled in PLC or ARC," he said.
The 2013 cotton-base now becomes generic-base for the life of the Farm Bill, Langley said. As generic, it would not fall under the reallocation and will be treated differently, he said.
Decision aids to help farmers choose which way to go are being developed and should be available by the end of summer, Wailes said.
However, after the session Wailes said he expects the process to be rife with confusion. "If you think the signup for healthcare had problems, it is nothing to what is coming," he remarked.
While he expects the decision aids to be ready for the farmers, the scope of the problem is "huge," Wailes said. The range of covering all eventualities is immense, he said.
Farmers can prepare for the decisions they must make by starting now collect historical yield and high-end basic data to develop price expectations, Wailes said.
That preparation is going to be an ongoing work in regard to the variety of Arkansas farms, Wailes said.
Possibly the most important of the issues is whether to re-allocate the base acres, and developing a perspective on the market price patterns because the decision aid is not going to be pre-populated with prices, Wailes said.
"You will have to plug in the price that you think will exist of the each of the next five years for each of the crops you think you will produce," he said.
"Trying to figure out your own idea of the baseline, where you see the market prices going on the particular commodity you are going to allocate base acres to, has never been more important," Wailes said.
"It will be worth your while to use these decision aids more than once before you do you signup. So that you are making sure that the decision aids are correctly modeling the rules," Wailes said.
"We all have big decisions to make this summer on top to trying to make a crop. We have a lot of work to do to get ready for this signup towards the end of the year," he said.