The new farm bill requires farmers to make a choice in how they will be compensated if disaster strikes.
Gone are direct payments, which guaranteed farmers a fixed amount per acre. Now farmers must choose Price Loss Coverage or Agricultural Risk Coverage -- programs that kick in when farmers suffer losses.
On Thursday, U.S. Department of Agriculture Secretary Tom Vilsack announced tools designed to help farmers decide between the two programs.
"This is very much an individual farmer-by-farmer, farm-by-farm and crop-by-crop decision," he said in a conference call. "There's no one answer here."
Under the Price Loss Coverage program, farmers receive payments when a crop's price dips below a reference price.
Farmers have two options under the Agricultural Risk Coverage program.
They can enroll in the county option, where crop revenue is estimated using county yields. Under that option, farmers are paid additionally if their revenue is less than the county's revenue guarantee.
Farmers also can enroll in an individual option, where they receive additional payments if their revenue from covered commodities is less than an individual guarantee.
The USDA tools allow farmers to input the parameters of their farms in order to make an informed decision about which program to choose on a crop-by-crop basis.
There are "tens of thousands or hundreds of thousands of dollars riding on the decision," Vilsack said.
The tools were developed in partnership with the University of Missouri, Texas A&M and the University of Illinois.
Vilsack also said farmers will be able to reallocate base acres and update their yield history -- a one-time opportunity that could affect payments under the new programs.
Letters sent this summer enabled farm owners and producers to analyze their crop-planting history in order to decide whether to keep their base acres or reallocate them according to recent plantings, he said.
Starting Monday, farmers can go to their Farm Service Agency office to revise the figures. Vilsack did not give a firm due date for the changes, but said it would be early next year.
"They ought to wait until they're very confident in their decision," Vilsack said. "We want to make sure they have time and information."
The tools are available at www.fsa.usda.gov/arc-plc.
Business on 09/26/2014