Sign-up ends Aug. 14 for new revenue and direct payment programs
WILLMAR -- Local Farm Service Agency offices continue to accept requests to participate in either the Direct and Counter-cyclical Payment program or the new Average Crop Revenue Election program. Application requests will continue to be accepted through the extended sign-up deadline of Aug. 14.
Many producers had earlier expressed their desire for additional time to study and weigh their options with the new revenue program. In response, USDA officials previously announced that sign-up deadline of June 1 -- for both programs -- was being extended to Aug. 14.
Producers may elect and enroll in Average Crop Revenue Election for the 2009 crop year, even if they've already enrolled in Direct and Counter-cyclical Payment and received an advance direct payment.
Authorized by the 2008 farm bill, Average Crop Revenue Election is a new and innovative alternative to the traditional counter-cyclical payments. However, producers will need to carefully consider their options before deciding if the optional revenue program will provide them with better financial protection than what the Direct and Counter-cyclical Payment program currently affords.
While the decision to elect the new revenue program can be made for any of the crop years 2009-2012, once the decision to elect is made, the decision is irrevocable and binds the farm to the program through the remainder of the 2008 farm bill, which continues through the 2012 crop year. Therefore, the decision to elect is especially important to all current and future farm owners and operators.
Producers may elect the revenue alternative on a farm-by-farm basis, with "farm" being defined by the farm number that has been assigned by the local Farm Service Agency office. If, for Average Crop Revenue Election participation purposes, farm operators and owners wish to reconstitute their existing farm number, a written request will need to be submitted to their local office by Aug. 3.
By participating in Average Crop Revenue Election, producers agree to forgo counter-cyclical payments, accept a 20 percent reduction in direct payments and receive a 30 percent reduction in their commodity loan rates for all commodities produced on the farm.
Unlike the counter-cyclical payments, which are solely based on price, Average Crop Revenue Election payments are revenue-based payments that take into account both the farm's actual crop production or yield, and the national average market price of the commodity.
However, farm and state averages go into the equation of determining eligibility for payment and payment rate.
To make an informed decision regarding Average Crop Revenue Election participation, farmers and landowners need to know the benchmark yields and the price guarantees that will be used to determine if a state and farm qualifies for a payment.
The 2009 state benchmark yields for Minnesota will be as follows: corn - 161 bushels per acre; soybeans - 41; wheat - 50; barley - 60; and oats - 63.
The farm benchmark yields will be a simple average of the yields for the most recent five crop years, excluding the high and low yields. For the 2009 crop year, a farm's benchmark yields will be established using the crop years 2004-2008.
Production evidence, including crop insurance yields, must be used to determine a farm's benchmark yields. For years in which the current farm producer did not have control of the farm, or did not plant a specific commodity in one or more of the preceding five crop years, a "plug" yield will be assigned equal to 95 percent of the average county yield.
The 2009 small grain price guarantees, for both participating farms and the state, will be as follows: wheat - $6.63; barley - $4.09; and oats - $2.89.
Since the 2009 marketing year for corn and soybeans concludes on Aug. 31, the price guarantees currently being provided by USDA are only estimates of the expected average price for the 2008 and 2009 marketing years. As of July 10, the estimated price guarantee for corn was $4.13 per bushel, and $10.05 for soybeans.
All revenue program payments are based on the planted and considered planted acres of eligible commodities, without regard to whether the farm has base acres for the crop. Commodities eligible for payments include wheat, corn, soybeans, oats, barley, grain sorghum and a number of minor oilseed crops.
The payment acreage is equal to 83.3 percent of the planted and considered planted acres of a commodity, unless the sum of the payment acreage for the farm exceeds the farm's total base acres. In this case, the producer must choose the number of payment acres for each commodity, not to exceed the total base acres on the farm.
In the coming days, producers should talk with their local Farm Service Agency office to learn more about the program. More information, including a program payment calculator, is available at: www.fsa.usda.gov.
Wes Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.