2014 Farm BillThe Agricultural Act of 2014, more familiarly known as the Farm Bill, was finally passed in February, and since then the changes made in the final iteration of the bill are out in the open. Among the most significant changes for farmers and landowners—besides the end to direct payments—are the expanded insurance and revenue protection programs available. In place of DCP and ACRE programs, the new farm bill will offer:

• Price Loss Coverage (PLC), a price protection program that triggers payments when market year average prices fall below target levels, which are called reference prices.

• Agricultural Risk Coverage County (ARC-C), a revenue protection program that triggers payments when the county revenue per acre falls below a benchmark revenue guarantee per acre set for the county.

• Agricultural Risk Coverage Individual (ARC-I), a revenue protection program that triggers payments when there is a revenue-per-acre shortfall on the individual farm that falls below a benchmark revenue guarantee per acre for that farm.

Producers taking advantage of the ARC program will have to choose either the county or farm option. The county option pays up to 85 percent of the base acres, while the farm option is limited to a maximum of 65 percent of base acres.

The PLC option will work much like the previous DCP program. The PLC payment results when the covered commodity’s marketing price falls below the reference price.

While the initial analysis of these new program options seemed a bit more clear-cut last spring, the falling grain prices and bearish markets coupled with the record volume of harvested grains forecasted this fall, the options become a bit muddied. In addition to the current market trend, it’s important for farmers and landowners to understand that whichever program in which they choose to enroll is permanent for the five year span of the bill, and cannot be changed. Therefore, it is critical that they make the best decision based on their specific farm situation.

Landowners also need to be aware that if “push-comes-to-shove” it is really the operator of record for 2014 that will make the decision.  With that in mind, landowners should work with their land tenants to arrive at a decision that both parties are comfortable with.  A professional land manager can provide valuable assistance to landowners when it comes to negotiating the correct programs for their land.If you are changing tenants for 2015, the former tenants have the authority to make the program decisions, when they really have no stake in the 2015 or beyond crops.  This could leave the landowner, or new buyer, of the farm with a program choice they didn’t have input on. The FSA is still determining if there’ll be exceptions made for those types of situations.

Some other specific considerations to be aware of are as follows:

  • Failure to enroll in 2014 places a farmer automatically in the PLC program beginning in 2015 with no payment eligibility for the 2014 crops
  • If choosing either PLC or ARC-C, a farmer may enroll in different programs commodity by commodity. As an example on the same FSA farm, the corn base acreage could be enrolled in PLC while soybeans are enrolled in ARC-C
  • If choosing the ARC-I program all base acres on that FSA farm must be enrolled in the ARC-I program
  • Base acreage can be reallocated to be in the same proportion as the actual planted crops during the 2009 to 2012 crops. This will be an elective as each farm can stay with the current base, or update.
  • Those electing PLC can update their FSA yield base to 90% of that farm’s yields from 2008 through 2012. It is likely that most electing PLC will also want to update their yields.

Undoubtedly, farmers and landowners have even more critical decisions to make with the expended program options available with the new Farm Bill. The pressure is on to have the latest information in order to make the right decision. This program details are still evolving and training for FSA staff is going on as this is written.  More information will come to light in the weeks ahead.

Do you have questions or concerns about the latest Farm Bill’s affect on your land and how the programs will be applied to your property? Contact a UFARM representative, and they’ll be happy to help make you make an informed decision.

Sources consulted:
Clayton, Chris. “Offering Advice on Farm Bill Choices.” The Progressive Farmer. 12 Oct. 2014. Web. 13 Oct. 2014.
Keeney, Roman. “A Perspective on the 2014 Farm Bill.” Purdue University Center for Commercial Agriculture. Purdue University Ag Econ Dept. 2014. Web. 13 Oct. 2014.

Meeting with UFARM Land ManagerOwning a farm or ranch is an investment with a unique responsibility. As a steward of the land, natural resources are under your control. Your financial contribution as a landowner also has the potential to allow a tenant operator to maintain a farm lifestyle. With land investor participation, farmer operators can rent at least some of the land they farm. Because of the high capital involved in both land and equipment, many young farmers in particular depend upon the availability of rented land.

Arranging leases, supervising tenants, and managing accumulated or inherited farm property is more time consuming than most non-farm residents anticipate. The string of decisions that must be constantly made often poses problems for the absentee owner. A popular solution is to depend upon a qualified land management team to implement a managerial plan to oversee an income-producing operation and to preserve the property’s resources. When selecting a management partner, consider proximity to the managed property, this helps ensure that visits are made to the property on a consistent basis.

Once a management agreement is signed, the land management company prepares an inventory of all assets involved. The land manager goes through a check-in process to itemize specific details of the property. This inventory includes FSA aerial photos, NRCS soil maps, previous crop history, and a complete listing of buildings or structures.

Insurance is reviewed at this time to determine that the site has adequate coverage at the best rate. Property tax valuations are also reviewed, and compared with other properties to determine that the farm is not being unfairly assessed.

A report is prepared which includes recommendations for the land’s best use to meet the landowner’s ownership and investment goals. Rely on your farm manager to do the following for you:

  • Make recommendations regarding lease options
  • Locate the best qualified operating personnel
  • Negotiate and prepare lease agreements
  • Manage and maintain homes, buildings, and other improvements
  • Develop a comprehensive operating plan covering crop or grassland rotations, tillage practices, chemical applications, etc., which are beneficial for the long-term value of the property
  • Supervise crop programs and conservation measures
  • Manage crop and livestock sales
  • Advise and oversee capital improvements
  • Facilitate participation in and compliance with government programs

There are far too many day-to-day responsibilities to itemize, but whatever needs to be done or whenever an opportunity arises, your land manager will work on your behalf. They have the experience and education to manage production inputs and improve margins that will make the operation profitable and sustainable.

Remember to choose a farm management company that lets the landowner choose their level of involvement. As an owner you want to make sure you are kept up-to-date, are informed of decisions made, and are asked for approval when necessary.

When looking for experienced land management, make sure to consult with the professionals at UFARM to help you get the most from your investment. United Farm and Ranch Management (UFARM) is a Nebraska-based company devoted to meeting landowners’ needs. UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance. UFARM has operated in Nebraska since the early 1930’s. Contact Us.