Congress Updates Farm Bill

Goodbye, generic base. Congress recently passed changes to the farm bill via a disaster bill that adds seed cotton to Title I commodity programs. The 2014 Farm Bill excluded cotton from Title I due to lawsuits filed by Brazil through the World Trade Organization (WTO); now, Congress hopes to avoid future WTO challenges by using seed cotton instead of cotton lint.

The changes are only effective for one year, though, so landowners and operators must act quickly—within 90 days of Feb. 9.

In addition to updating cotton yields, owners and operators must choose between two base update options. The first allows for the conversion of the generic base to the higher of 2009-2012 cotton acres, not exceeding the generic base or 80% of the generic base to seed cotton. The remaining 20% will be unassigned and no longer eligible for Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC) programs.

For example, if a farm has 100 acres of generic base and has planted on average 120 acres of cotton, the farm would qualify for 100 acres of seed cotton. Otherwise, 80 acres would qualify for seed cotton and the remaining 20 acres would be unassigned and disqualified from PLC/ARC programs.

The second option is to allocate the generic base proportionally to the average planting of cotton and other covered commodities from 2009-2012. For example, if a farm with 100 acres of generic base planted on average 50 acres of rice and 50 acres of soybeans during the 2009-2012 seasons, the owner/operator could change the 100 acres of generic base to 50 acres of rice base and 50 acres of soybean base.

Finally, owners and operators must choose to elect either the PLC or ARC program. PLC is based solely on price while the ARC program is a function of revenue (price and yield). A farm without an election will be placed into PLC.

To recap, landowners and operators need to 1) update cotton yields, 2) select a base update option and 3) choose between PLC and ARC. Such decisions require yield records from 2008-2012 and planting records for 2009-2012.

With the above information, you or a consultant like Glaub Farm Management can analyze the data to determine the optimal option for your farm. Once a decision is made, immediately contact your local Farm Service Agency to sign up as the deadline is quickly approaching.