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University of Illinois at Urbana-Champaign

Program Crop Decision Steps

The following ‘7 Steps’ are designed to help guide you through the decisions required for each FSA farm.

Steps Overview

The Basics

Instructions

  1. The following provides a guide to the tool features:
    • Use the Steps navigation bar at the top to access any step. A orange-lit block indicates the currently selected step..
    • For each step, the Resources navigation bar links additional content: an overview, a webinar video, related farmdoc daily articles, the APAS tool site, FAST Tools MicroSoft Excel spreadsheets and Frequently Asked Questions.  
    • For each step, The Basics includes a step-by-step guidance discussion and resource links to videos, documents and APAS online tool. 
    • Videos will display in a black-out modal format which can be closed by clicking the ‘x’ in the upper right corner. Overview, Articles and FAQs content will display on a new page. 
  1. Your Decision
  2. The 2014 Farm Bill allows land owners and farmer to make three sets of decisions for each FSA farm
    1. Retain or update yields 
    2. Retain or reallocate base acres
    3. Choose the program for each program crop
  • Guidance This tool contains seven steps to lead you through this decision-making.
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Watch video | ARC-PLC Decision Steps
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This is In August, FSA sent a letter to all landowners and producers of record.  This letter is FSA’s record for each of your FSA farms.  It provides the following information that you will need for the decision and the APAS decision tool:   ü  FSA farm number(s)   ü  Commodities with base acres on the FSA farm(s)   ü  The amount of base acres for each commodity on the FSA farm(s) as of 2014; in the decision for each FSA farm you can reallocate these base acres across program crops (more information for this decision can be found in step 3 [link])   ü  The program yield on record for each commodity on the FSA farm(s) as of 2014, listed in the letter as the “CC yield” (or counter-cyclical yield); in the decision for each FSA farm you can update the program or payment yields for each program crop individually (more information for this decision can be found in step 4 [insert link])   ü  FSA’s record of the planting history for the FSA farm(s) for the 2008 through 2012 crop years; this information has been generated from the form (578) filed for the farm certifying what was planted, prevented from being planted, planted as double crop or planted as a subsequent crop.  The 2009 to 2012 crop years will be used to help determine the potential reallocation of base acres if you decide to reallocate.   In addition to this letter from FSA, it is recommended that you also have your crop insurance records for each farm on hand as you go through the APAS decision tool.  In particular, you will want your yield histories for the 2008 through 2012 crop years.   If you do not have crop insurance records, it is recommended that you have on hand other yield history information.  For the payment yield update, the current owner’s self-certification of the 2008 to 2012 yields (subject to spot check or verification) will be accepted.text inside of a div block.

Step 1:  Collect Information

The Basics
  • Prior to making any program comparisons or decisions, producers are advised to collect information for their each of their Farm Service Agency farms. 
  • Information Needs FSA Letter In August, FSA sent a letter to all farm operators and landlords containing the following information for each FSA farm: 
    • Current base acreage
    • Program yields (called 2014 CC Yields in letter)
    • Acres planted to program crops from 2008 through 2013
  • This information will be used in the yield updating, base acreage reallocation. and commodity program choice decisions.
View sample of the FSA letter
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Watch video on the FSA letter
  • Information Needs Yields from 2008 through 2012  Yield from 2008 through 2012 will be needed to analyze the payment yield update decisions.  This information will need to come from farm records, including crop insurance.
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Watch video on yield data

Step 2: Keep or Update Yields

The Basics
  • Your Decision There are two choices for each program crop: 
    • Keep current program yields 
    • Update program yields
  • This decision will impact payments from the Price Loss Coverage (PLC) program.  It will not impact payments from Agricultural Risk Coverage (ARC) but you can update payment yields even if you elect ARC.  In fact, if higher, the guidance will be to update yields.
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Watch video on yield decision
  • Information Needs A farm’s current program yields are provided in a letter sent by FSA in August (popup box with letter highlighted).  If you choose not to update your program yield, this will be the program yield for that crop.
  • Yields for 2008 through 2012 will be used to update program yields.  Cropping records will need to be used to determine updated program yields for these farms.
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Watch video on yield data
  • Online Tool The following tool calculates updated program yields.  The updated yield will be 90% of the average yield from 2008 through 2012.  If farm yields are below a “plug” yield, the plug yield will be used in the calculation.
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Watch video on APAS tool | yield data
Visit APAS online tool now
  • Guidance Choose the option that results in the highest yield.  Points on this decision: 
    • This is a crop by crop decision.  Decisions can differ by crops on a FSA farm
    • Update yields even if PLC will not be chosen.  These program yields could be important in payments for future farm bill programs
    • One reason to not update is because acceptable yield documentation does not exist 
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Watch video on yield decision guidance

Step 3: Retain or Reallocate Base Acres

The Basics
  • Your Decision The decision is to: 
    • Keep the current allocation of base acres on each farm, or
    • Reallocate base acres according to plantings from 2009 through 2012.
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Watch video on base acre decision
  • Information Needs Current base acres were provided in the letter received from FSA (popup box with letter highlighted).  These base acres will be the base acres for the farm unless the decision is made to reallocate.
  • Acres planted to program crops in 2009 through 2012 will be used to calculate reallocated base acres (popup box with letter highlighted).  Planted acreage is reported in the letter sent from FSA.       
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Watch video on base acre data
  • Online Tool This decision will not change the amount of total base acres for any farm.  It only impacts base acres in each program crop.  Reallocated acres will be based on the ratio of planted acres to each crop from 2009 to 2012. The following tool will calculate reallocated base acres for a FSA farm given planted acreage information. 
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Watch video on APAS tool | base acre 
Visit APAS tool online 
  • Guidance Generally, producers should choose the allocation (current or reallocation) that results in the largest share of base acres in program crops associated with larger expected program payments. Expected program payments by crop are provided in the APAS decision tool.
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Watch video on base acre decision 

Step 4: Compare ARC-CO and PLC 

The Basics
  • Your Decision Program payments will be received from one of three options: 
    • Price Loss Coverage (PLC),
    • Agricultural Risk Coverage – County Option (ARC-CO) and,
    • Agricultural Risk coverage – individual coverage (ARC-IC).
  • In this step, we focus on the first two -- PLC and ARC-CO – because these are crop-by-crop decisions. 
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Watch video on the ARC-PLC decision
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Watch video on PLC
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Watch video on ARC
  • Information Needs ARC-CO is a county revenue program.  Payments will be based only on county revenues.  Farm-level yields does not enter into payment calculation.  The only information needed will be the county in which the FSA farm is located. 
  • PLC payments are triggered if the program crop’s season average price during the marketing year falls below that crop’s fixed reference price. The season average price is calculated at the national level, and is the same for all farm operations.  Program yields, which could have been updated in step 2, will impact the size of payments for an individual farm.
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Watch video on your decision
  • Online Tool The sample farms in APAS will provide information on expected payments by program crop for the PLC and ARC-CO programs.  This will give you a feel for which program is expected to generate the highest payments.
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Watch video APAS tool | sample farms
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Watch video on APAS tool | BYOF
Visit APAS tool online 
  • Guidance 
    • Expected payments.  Generally the program with higher expected payments will be preferred. 
    • Low price considerations.  PLC has a reference price that is fixed, payments will only occur if the market-year-average price is below the reference price.  ARC-CO uses the county revenue (price times yield) for the most recent five years, which will initially use a higher price that can decline.
    • Availability of Supplement Coverage Option (SCO).  SCO is only available for acreage planted to crops enrolled in PLC.  More detail on SCO is given in Step 6.
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Watch video on ARC-PLC guidance

Step 5: Consider ARC-IC

The Basics
  • Your Decision Rather than enroll each program crop on a farm in PLC or ARC-CO, farmers can also enroll the entire farm in ARC-Individual Converge (ARC-IC).
  • ARC-IC is a whole farm approach.  It will calculate a guarantee for the whole farm based on a farm’s yield history using all program crops on the farm. 
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Watch this video on the ARC-IC decision
  • Information Needs To enroll in ARC-IC, the farm will have to provide the following information
    • Historic yields for each program crop on the farm for the five previous years.  Initially, for 2014, these will include yields for the years from 2009 to 2013.
    • In the future, farm-level yields will have to be provided for each crop for payment calculations.  For example, 2014 payments will be based on farm yields in 2014.  Each farm will have to provide this yield information to FSA.
  • Online Tool Expected payments from ARC-IC are given for sample farms in APAS.
  • Guidance Generally, ARC-IC will have lower payments than ARC-CO for the following reasons
    • ARC-IC pays on 65% of base acres while ARC-CO and PLC pays on 85% of base acre
    • Basing payments on multiple crops usually lowers payments
    • ARC-IC will aggregate all FSA farms enrolled in ARCP-IC.  This will tend to lower payments
    • Farmers will have to provide yields each year of the length of the Farm Bill.  This will not occur under the ARC-CO or PLC
  • An FSA farm with one crop that is highly variable may be good alternative to enroll in ARC-IC
Visit the APAS sample farm tool now
  • Guidance Generally, ARC-IC will have lower payments than ARC-CO for the following reasons
    • ARC-IC pays on 65% of base acres while ARC-CO and PLC pays on 85% of base acre
    • Basing payments on multiple crops usually lowers paymentsARC-IC will aggregate all FSA farms enrolled in ARCP-IC.  This will tend to lower payments
    • ARC-IC will aggregate all FSA farms enrolled in ARCP-IC.  This will tend to lower payments
    • Farmers will have to provide yields each year of the length of the Farm Bill.  This will not occur under the ARC-CO or PLC. An FSA farm with one crop that is highly variable may be good alternative to enroll in ARC-IC

Step 6: Consider SCO

The Basics
  • Your Decision The Supplemental Coverage Option (SCO) is a new crop insurance product available in the 2014 Farm Bill.  It provides coverage from 86% down to the coverage level of the producer’s COMBO product (Revenue Protection, RP with harvest price exclusion, or Yield Protection)
  • SCO is only available if PLC is the program choice.  Here are the things you should consider if you wish to use SCO for any of your program crops.
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Watch this video on the SCO decision
View Fact Sheet for SCO from RMA
  • Needed Information SCO will be available to the following producers; 
    • The crop on the farm is enrolled in PLC
    • The producer purchases crop insurance under a plan of the COMBO product
    • The producer is in a county with a SCO product
View Maps of SCO Availability for 2015 
View List of SCO Availability for 2015 
  • Online Tool The sample farms APAS tool will allow you to determine the average payments expected from SCO in those counties with an SCO policy in 2015. 
  • Guidance If located in an area where high coverage levels are available on existing COMBO products (i.e. 85% coverage), then the additional risk management benefits offered by SCO are relatively small. In these cases, the advantages of PLC versus ARC should be the major consideration in farm program decision-making. 
  • However, SCO will provide larger additional benefits in areas where the maximum available coverage levels on existing COMBO products are at lower levels such as 75%. In these areas, SCO may prove beneficial and should be considered more closely in making farm program decisions.
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