2014 Farm Bill Part 1: What you need to know.

For most farmers and agribusiness people the 2014 is very confusing. As more and more folks try to learn about all the decisions needed to be made, the first you need to know is DON’T PANIC. You shouldn’t panic because there is plenty of time before any critical deadlines regarding the 2014 Farm Bill (except for cotton transition payment which has already passed). Most folks are starting to worry about what they should do or which program they should enroll in. My recommendation would be to finish out this year first and worry about the new farm programs in late December or early January. There are several reasons why.

1) Your decision to reallocate base acres and/or update program yields is not due until Feb. 27, 2015. This may seem like a relatively easy task but it is actually very complex. The yield update allows you to update yields (to be used in either ARC or PLC) based on crop history from 2009-2012. Years in which a crop is not planted do not count against yield (if no peanuts planted in 2009, then a 0 will not be put in year 2009, it will be omitted.) In Georgia, most people will probably want to update their yields as 2002 was the last yield update in any Farm Bill and yields have definitely gone up since then. Reallocating base is not as simple. Total base acres for a farm cannot increase, but can be reallocated among crops planted in 2009-2012. Years a crop was not planted do count against your base numbers (if no peanuts planted in 2009, then a 0 gets averaged in for year 2009). This may be something you would like to start thinking about now, but without sitting down and looking at each farm individually, it will be really hard to figure out how you should allocate your base. Also cotton base acres are now called generic base acres. Generic base acres cannot be reallocated to other base acres but are designated yearly depending on what is planted. For example, if you have 500 acres of cotton base, then now you have 500 acres of generic base. When you go to FSA to reallocate base and/or update yield you will specify what program crops you might plant from 2015-2018 on that generic base. Each year your generic base will shift depending on what you plant, and those acres of generic base are only paid on planted acres. Your other base acres work in the same manner as with other farm bills, meaning payments are made purely on base acres and not planted acres. Therefore this becomes extremely confusing between farms and cannot be figured out over coffee, you must sit down and work this out on paper.

2) You have until March 31, 2015 before you need to elect ARC or PLC program. Again, time is not pressing on this issue. Actually I think it is better to wait until February to really start looking hard at ARC and PLC. Both ARC and PLC are triggered by prices and revenue declines. With prices continuing to decline in the last couple of months, each program looks different depending on the prices at the time. No one has a crystal ball to know what prices are, so the safest move would be to wait until closer to the deadline to choose your program. More on this in part 2.

3) You won’t sign any FSA contracts until April 2015. Once you enroll in either ARC or PLC you will not actually sign a contract with FSA until April 2015.

4) STAX and SCO are not that confusing! I’ve heard multiple times over the last 5 or 6 months about how confusing the new STAX and SCO programs are. Well, don’t panic because lots of people think that these programs are confusing but they really are not. More on this topic in a later blog, but please note that STAX/SCO work very similar to regular crop insurance except that they are shallow loss programs and cover a band of revenue. This means that they are triggered at a smaller loss of revenue and cover a “band” of revenue (for STAX 20% coverage band from 90% down to 70% of expected revenue). Again, I will dedicated a whole blog to this later. STAX/SCO can be purchased at the same time you purchase other crop insurance, so don’t panic now as most folks buy insurance until after the new year.

In closing I want to reiterate that there is no need to panic right now. There is plenty of time to sit down over the winter and figure these things out. I think most folks are getting anxious because of the complexity of the 2014 Farm Bill. This is true as the last several farm bills just required a producer to go into FSA and tell them how many acres of each crop (excluding the ACRE program from the ’08 Farm Bill; not many southerners enrolled in it though). Now each farm will have to be looked at individually to see which program works best for it. As I’ve written before, there are numerous tools for farmers to use to help make this decision. Visit our homepage and click one of the icons on the right side to view the online decision tool of your choice.

STAX/Farm Bill Meetings Nov 18th & 19th

We expect a big crowd at the upcoming STAX/Farm Bill meetings on Nov 18th and 19th. In case you missed it, there was a Farm Bill passed earlier this year, and the implementation of it is finally starting to take place. There are many changes in the new farm bill that will be discussed, but most importantly the two new insurance options for cotton, SCO and STAX, will be discussed.

I will write in more detail on this later, but in brief STAX (Stacked Income Protection Plan) is an insurance policy only available for cotton that covers revenue from 70-90%. STAX is a county based program, therefore if your county revenue drops below 90% of expected county revenue, then a indemnity payment is triggered. SCO (Supplemental Coverage Option) is also a county based program that covers revenue from 86-75%. Similar to STAX, an SCO payment is triggered if revenue falls below 86% of expected county revenue. The two programs differ in that STAX is cotton only and does not require an underlying insurance policy. SCO requires and underlying insurance policy and is available to most covered commodities (corn, soybean, sorghum, peanuts) plus cotton. I think most folks would have loved for STAX and SCO to have been available this year (if Farm Bill would have passed in 2013) as it seems it would have helped with the current price decline.

Also, November 17th marks the first day for sigm-up for ARC/PLC under Title 1 of the Farm Bill. Don’t feel rushed into making a decision as the enrollment period is open until March 31, 2015. Again, I will write more on this later. Soon, be looking for an entire post or series of post on the Farm Bill and making sound decisions about Farm Bill programs.

Bostwick Cotton Gin Festival and Evans County Centennial Ag Day

The last two weekends have been filled with fun activities and agricultural history. The 25th annual Bostwick Cotton Gin Festival was held November 1st. We have the pleasure of being a small sponsor of this event by giving out promotional items related to cotton as well as being on hand to answer questions (most attendees are not from the farm). The Gin Festival starts out each year with a 5k run followed by a downtown festival with food vendors, arts & crafts, antique tractors, etc. Like most festivals there was a parade of mostly antique tractors and local elected officials. The best part of the day was seeing folks walk through the gin while it was running. People were able to ask questions and see exactly how seeds are removed from lint and how the lint is baled. It was amazing seeing people’s reactions when you explain the ginning process. I guess everyone learns about Eli Whitney in school but people don’t really understand what a cotton gin does and how important the invention was and is to the agricultural industry. Despite the cold weather, I believe there were several thousand people in attendance at the festival and the gin had just about 1000 people walk through and see cotton being ginned.

bostwick gin2bostwick gin1

On November 7th and 8th Evans County GA kicked off it’s Centennial Celebration Week with a two day Ag and Forestry History Celebration. The event was set up at the Evans County Wildlife Club pavilion with displays for cotton, peanuts, tobacco, tractors, soda shops, EMCs, and anything else that relates rural life for the last 100 years. The event was open to the public and Friday was filled with Evans County elementary school children. Cotton had a major presence as we were able to set up a display of seed cotton, cottonseed, and cotton lint for kids to touch as they came by. We also had plenty of educational information to give to the children to help them learn about cotton. Outside were displays of old tractors, old cotton scales, new tractors, and both types of modules. Inside we also were able to show some old photographs of cotton being hand-picked and being plowed with a mule. The most telling thing to me were the graphs we had showing the acres vs. bales produced in GA for the last 100+ years. It is very evident when boll weevil hit hard in GA and Evans County went to almost 0 acreage in the hardest times in the 1980s. Fortunately it was able to recover and is now a vibrant industry once again for the region. This was just one of many stories that could be told of the 100 year history of agriculture in Evans County.

evans county2evans county1