USDA Secretary Tom Vilsack tours California

USDA Secretary Tom Vilsack toured California ahead of the 2014 Farm Bill passage to assure growers that programs in the new legislation would benefit them.

Farm Bill safety-net provisions require careful planning

ARC/PLC programs new under 2014 Farm Bill Upland cotton base acreage dropped for STAX coverage Dairy Margin Program replaces MILC  

The 2014 Farm Bill offers farmers and ranchers a host of safety-net opportunities and program changes that will necessitate some careful planning and conversations with local Farm Service Agency officials.

For other programs, a visit with a nearby crop insurance agent might be helpful.

While this cannot be an exhaustive explanation of 2014 Farm Bill programs or answer all questions for the hundreds of commodities grown in California and Arizona, growers should use the coming weeks and months to plan ahead as the various risk management programs offered by the U.S. Department of Agriculture have application deadlines.

“The 2014 Farm Bill represents some of the largest farm policy reforms in decades,” said USDA Secretary Tom Vilsack.

USDA Farm Service Agency Administrator Val Dolcini has been traveling the United States, meeting with FSA staff as they learn the various new programs available under the new Farm Bill.

For Dolcini it’s also been a learning experience as he was recently promoted into the position from his former post as the California State FSA Director. Since early September he has been traveling the United States learning the regional differences in agricultural production and discussing Farm Bill implementation procedures with FSA staff.

Dolcini said his focus in California, and now at the federal level, remains essentially the same: help producers understand the various safety net programs available to them under the new Farm Bill and to steer them in the best direction for their particular operations.

“I’m really stressing throughout the country that folks should not exclusively look at the dollar signs associated with each program, but should view it in a context of an overall risk management strategy because many people carry crop insurance as well,” Dolcini said.

Top programs

California and Arizona growers will likely be most interested in the new Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, according to Dolcini. These replace direct payments models under previous Farm Bills. Both are considered “cornerstone” programs under the new Farm Bill.

ARC and PLC offer farmers protection when market forces cause substantial drops in crop prices. Producers will have until March 31, 2015 to select which program works best for their businesses.

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Under ARC and PLC growers must first update their yield history and/or reallocate base acreages before choosing either program. Growers have until Feb. 27, 2015 to reallocate base acres or update yields. Letters were sent to growers informing them of these changes and deadlines.

After reallocating base acres and updating yield history producers can select the type of coverage (price protection, county revenue protection, and/or individual revenue protection) for crop years 2014-2018.

Under the PLC program, payments are issued when the effective price of a covered commodity is less than the respective reference price for that commodity as established in the statute for the 2014-2018 crops.

County ARC coverage payments are issued when the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for that commodity.

Enrollment in ARC/PLC programs will take place through the summer of 2015, where producers can sign contracts to participate for the 2014 and 2015 crop years.

Upland cotton

Upland cotton is no longer considered a covered commodity; therefore, upland cotton base acres on the farm are now considered “generic” base acres and cannot be reallocated. Producers may receive ARC/PLC payments on generic base acres only if those acres are planted to a covered commodity.

Additionally, Upland cotton producers should be eligible for the Stacked Income Protection Plan, or STAX. Details for this program are still being hammered out, but suffice to say irrigated STAX coverage in California will include the counties of Glenn, Colusa, Yolo, Merced, Madera, Fresno, Kings, Tulare, Kern, San Bernardino, Riverside and Imperial.

STAX protects against county wide revenue losses and can supplement a producer’s underlying cotton policy, or be purchased as a standalone policy. Producers can elect STAX coverage of up to 20 percent of expected county revenue, depending on the coverage level of their individual cotton insurance policy.

STAX payments begin when county revenue falls below 90 percent of its expected level. The premium subsidy for this coverage is 80 percent. Any acres covered by a STAX policy may not be covered by the Supplemental Coverage Option.

The Risk Management Agency is making every effort to offer STAX to as many producers as possible.

Further information on the STAX program will be coming out in November through a series of meetings held by the National Cotton Council. Meetings in California and Arizona will take place Nov. 10 at 9 a.m. at Harris Ranch at Highway 198 and I-5; and, in Casa Grande, Ariz. on Nov. 11 at The Property Convention Center, Ellington Ballroom, 1251 West Gila Bend Highway.

New dairy program

Another program Dolcini said will be big for California and Arizona producers is the Margin Protection Program for Dairy, or MPP.

The MPP is a voluntary risk management program for dairy producers and provides protection when the difference between the all milk price and the average feed cost (margin) falls below a certain dollar amount selected by the producer.

Catastrophic coverage of $4 margin coverage at 90 percent of the established production history requires no premium payment, though a $100 administrative fee is required to enter the program. Additional fees may be required for higher coverage levels.

For increased protection, dairy producers may annually select coverage from 25 to 90 percent of the established production history and a coverage threshold from $4.50 to $8.

Eligible dairy operations must produce and commercially market milk from cows located in the United States, provide proof of milk production at the time of registration, and not be enrolled in the Risk Management Agency’s Livestock Gross Margin for dairy program.

Registration for this program continues through Nov. 28. Dairy producers can use a new web tool to test a variety of financial scenarios before enrolling in the program. That web tool is located at www.fsa.usda.gov/mpptool.

A new Whole-Farm Revenue Protection insurance premium subsidy was also established under the Farm Bill. This is a more affordable protection program for eligible diversified farming operations, including those with fruits and vegetables.

The program allows farmers to insure all of their crops and livestock on the farm under one insurance policy rather than insuring each commodity separately. While these policies are sold through crop insurance agents, the program is administered by the Risk Management Agency. For more information, go to www.rma.usda.gov.

A non-insured crop disaster assistance program, or NAP, is also available to growers, and covers losses resulting from drought, freeze, hail, excessive moisture, excessive wind or hurricanes. It also covers natural disasters related to earthquakes, floods, excessive heat, plant disease and volcanic eruptions.

Crop insurance

Nationally, crop insurance is available for about 130 different crops, according to Jeff Yasui, regional director for the USDA Risk Management Agency covering Arizona, California, Hawaii, Nevada and Utah.

These policies (with various restrictions and qualifications) indemnify against yield or revenue losses that are the result of natural disaster, price declines or weather conditions.

“Crop insurance covers a wide gamut of crops, including grain crops, oilseeds, feed crops, fruit and nuts, vegetables, and other commodities such as nursery crops, apiculture, livestock, and aquaculture,” Yasui said.

In California, 58 different crops are covered on nearly 6.8 million acres, Yasui said. These crops include many of the fruit and nut crops, cotton, rice, grain crops, and rangeland.

Historically, the crops with the highest total liability include almonds, grapes, citrus, tomatoes, and rice. Some crops, such as cotton, rice, and grain crops can provide payments for prevented planting as a result of the drought conditions.

To date, over $75 million dollars have been provided for prevented planted losses, mostly for extra-long staple cotton and rice. Claims for planted crops have resulted in $105 million in indemnities, and the total amount of indemnities will increase as claims continue to be processed by crop insurance companies. 

In Arizona, 29 different crops are covered on nearly 600,000 acres. To date, a total of $5.6 million has been paid for crop losses and includes payments for prevented planted. Cotton is the most insured crop in Arizona.

 Growers are urged to visit their local FSA office for more information on specific programs, reallocate base acreages and enroll in the various programs.

Information for the 2014 Farm Bill can be found online at www.usda.gov/farmbill.

Contact your local crop insurance agent, or visit http://www3.rma.usda.gov/tools/agents/companies/ to search for a licensed crop insurance agent.

 

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