Farm Bill Debate: All About Base Acres

OMAHA (DTN) -- Congress has stalled over the past year in writing a farm bill and one clear demonstration of that challenge is that commodity groups are split on what farmers need in the safety net.

At the Commodity Classic show last week in Houston, Texas, groups representing corn, soybean and wheat farmers were divided on what, if anything, should happen to base acres. All three major groups do see a need to increase reference prices, even though they know it's a costly ask.

Base acre allocations go back to the 1996 farm bill, but there were also "contract acres" before that. The 2014 farm bill allowed new base acres for some oilseed and pulse crops, but also allowed farmers to reassign their base acres to other crops.

Base acres are the core for the Agricultural Risk Coverage and Price Loss Coverage (ARC and PLC) programs. A producer needs at least ten acres of base to receive payments.

While base acres affect cottonseed, sorghum, barley, rice, oats, peanuts, minor oilseeds and pulse crops, the lion's share -- 83.5% -- are tied to corn acres (37.2%), wheat acres (25.7%) and soybeans (20.6%).

A U.S. Senate Agriculture Committee Minority Staff (GOP) analysis last summer concluded a mandatory base acre update would save taxpayers about $1.9 billion over ten years. Still, the analysis concluded, "Few in agriculture would benefit from a base acre update. A mandatory base acre update would create winners and losers among neighbors, crops, counties and states, and most certainly would complicate efforts to successfully pass a new farm bill."

A GOP Senate staffer reiterated that point in a forum during Commodity Classic, adding there is no consensus among farm groups on how to deal with base acres.

As acres have been converted from pasture or shifting crops over the past three decades, a growing number of farmers have little or no base to use for commodity programs.

Caleb Ragland, vice president of the American Soybean Association, said maybe 15% of the acres he farms are units of base acres. That's not uncommon where Ragland farms in central Kentucky, an area that was once full of tobacco fields and dairy pastures.

"There are many farmers in the same shoes that I am so I'm not able to be anywhere near to fully participate in some of the safety nets," Ragland said.

CORN FARMERS

Base acres: 100.74 million

Average planted acres: 91.9 million

Effective reference price for 2024: $4.01 a bushel

At the Corn Congress meeting at Classic, delegates for the National Association of Corn Growers voted 73-51 to keep pressing Congress for a mandatory update of base acres. The vote stood despite arguments from some states that a mandatory base-acre update is not politically achievable. Last summer, NCGA kicked off the debate over base acres by calling for a one-time, national, mandatory update as part of the farm bill.

Arguing against a voluntary base-acre update, NCGA delegates said it would be too expensive. The only farmers who would actually update their base acres are the ones who don't have any base or those who would benefit by flipping their base-acre crops to those more likely to generate an ARC or PLC payment.

"It all boils down to, if a voluntary update is going to be more expensive, it's going to be tougher to get that one to go through," said Minnesota farmer Tom Haag, chairman of NCGA. "It's been over ten years since we had an update for farmers with base acres.

Haag said a mandatory update seems fairer and it allows those producers who do not have base acreage to become enrolled in the commodity programs.

"It seems like there's more talk about the base acres than the reference prices," Haag said. "We'd like to see the reference prices go up, but a lot of our delegates want to address the situation with base acres."

SOYBEAN FARMERS

Base acres: 55.8 million

Average planted acres: 86.1 million

Effective reference price: $9.26 a bushel

The American Soybean Association has taken the position that there should be a voluntary base-acre update.

"Every farm is different and base-acre updates are different from farm to farm, they are different from state to state, region to region, and they are different from crop to crop," said Josh Gackle, a North Dakota farmer and president of ASA.

ASA would like to see reference prices increased so they more accurately match the costs of production.

In the 2018-19 trade war, prices fell but did not get low enough to generate a PLC payment. The same scenario is happening now as prices fall, but not low enough to trigger payments.

"If ARC and PLC don't trigger at those prices, it's clear that there's something wrong with the reference prices," Gackle said. "But I think we all know that it's going to take additional money."

On Stabenow's proposal, Gackle said ASA opposes choosing one or the other. "I think there is room for both increased reference prices and robust crop insurance and that's what we've been prioritizing and what we will continue to pursue."

WHEAT GROWERS

Base acres: 69.7 million

Average planted acres: 47.4 million

Effective reference price: $5.50 a bushel

The National Association of Wheat Growers (NAWG) opposes making changes to base acres in the farm bill, except for enrolling farmers who currently do not have any base acres, said Chandler Goule, CEO of NAWG.

"That's quite a bit of money and we're already in a money or revenue situation, or lack thereof, in this farm bill," Goule said.

He added NAWG has made the group's position clear to the "four corners" -- the chairs and ranking members of the House and Senate agriculture committees. "We do not support adding a base-acre update to this particular farm bill."

Goule said his members want to see any additional money go to help support reference prices, but that also includes a caveat. Any increase needs to be higher than simply a 10% bump -- going from $5.50 to $6 a bushel for wheat. Goule said such an increase would need to be at least $1 a bushel or more.

"Then you're getting into double-digit billions (of dollars), just for wheat alone," Goule said. " So, we need to be realistic with the limited amount of dollars in this bill. Where do we want to spend it? Maybe making crop insurance more affordable at higher coverage levels?"

NAWG doesn't support having farmers choose between higher ARC-PLC levels or better crop insurance. If funding levels are tight, the group's members would prefer focusing on making crop insurance more affordable.

"But we absolutely oppose having to pick between the commodity programs and crop insurance," Goule said.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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