Minding Ag's Business

Farm Program's Last-Minute Decisions

It's not too late to catch farm program pointers from DTN's pre-recorded March 12 webinar”Farm Program Countdown. ARC or PLC: Which Safety Net Fits You?" Speakers Gary Schnitkey, a University of Illinois economist, Jonathan Coppess, a former FSA Administrator, and Keith Coble, a Mississippi State University economist and Senate Ag Committee adviser, analyzed the likelihood of farm program payments in 2014 and beyond. Given the new release of county yields and the latest USDA 2014 price forecasts, most counties can estimate payments with new precision. Get the free link and download presentations at https://dtn.webex.com/…

Meanwhile, here are a handful of questions we didn't have time to answer during the real-time event:

QUESTION: I've purchased a new farm this month. What do I need to do to sign up by the March 31 deadline for ARC or PLC?

ANSWER: Wayne Myers, a farm program specialist with Kennedy and Coe, cautions last-minute tenants and new landowners who are closing on properties this month: "Operators and owners in these situations need to take special care to assure they don’t get into trouble with FSA on the ARC PLC election process," Myers says. "The Act itself and the FSA regulations clearly state that all producer/tenants on a farm that share on any crop on that farm as of the filing date of the ARC PLC election (Filing the CCC-857 form with FSA) must all agree to the elections being made for the farm on all crops and all must sign the CCC-857.

"There will no doubt be situations where a tenant/producer acquires an interest on a farm sometime prior to March 31st and will not sign the CCC-857 ARC PLC Election form for various reasons. If there is some form of documentation that show the person had an interest on that farm when the election was made and did NOT sign the form then FSA will deem the election invalid and make the farm ineligible for ARC or PLC 2014 payments and further place all crop bases into the PLC election for the remaining years of the farm bill through 2018.

"What documentation might FSA look for? Any written lease agreement or crop insurance report showing the tenant/producer had an interest in the crop as of the filing date likely will be used by FSA in their audit process.

"Also, if a new owner buys land and obtains a deed on the acreage and will share in the 2015 crop either by share rent or by operating that farm in 2015, they need to find out if Base Reallocation and Yield Updates options have been completed and if not take action to complete these options. Be sure they participate in the ARC PLC election by signing the CCC-857 or file one if it has not been completed."

QUESTION: How would ARC-CO work for me as a landowner, with a tenant farmer? I receive rent and a % of the income at the end of the year from corn and/or wheat. (Red Willow County NE) My tenant may already participate.­ --Bob

ANSWER: Bob, these payments are made to the farm operator and the 2015 farm operator is the one who decides which program to choose for 2014-2018. If you have a cash lease arrangement with the tenant and take no risk in the production or sale of the crop, you are not considered an operator. In that case, the operator will receive 100% of the government payment. Whether government payments are figured into your "bonus" percentage based on income at the end of the year is something your lease would need to specify. Just remember, there's a long lag time in government payments: Most leases end Dec. 31; any government payments for the crop harvested in the fall of 2014 won't be made until October 2015, for example.

QUESTION: ­How different is the analysis for a landlord with a 60/40 share crop arrangement in SW MN?­ --Stephen

ANSWER: Stephen, you differ from Bob's situation. Crop-share landowners are considered farm operators, so you'd split any potential payment according to your agreed-upon lease shares. In this situation both the tenant and the owner-operator will need to agree on which farm program to choose for 2014-2018. If you fail to agree, USDA will activate the default: You'll both be ineligible for a 2014 payment and you will be enrolled in PLC for the future.

Watch for more Q+A next week.

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