The 2014 Farm Bill will bring changes to key crop safety net provisions, and soon growers will need to make a long-term commitment to a new risk protection program. Are you prepared to make an informed choice?

Nick Paulson, Ph.D., associate professor of agriculture, University of Illinois, is working with the USDA to help farmers make the major decisions facing them in the upcoming Farm Bill. In the third episode of “Management Matters: Focus on Profitability,” Paulson explains what farmers need to know about the Farm Bill, what their options are, and how to choose the best program for their operation.



Key Takeaways:

  • Farmers’ first two decisions have a February 27 deadline:
    • Updating payment yields
    • Reallocating base acres
  • Farmers must also choose a risk protection program by March 31. Their options include:
    • Price Loss Coverage (PLC) program—If the average national price for a crop falls below a set reference price level, farmers will receive a payment equal to the difference.
    • Agricultural Risk Coverage (ARC) program—Crop revenue is estimated using the five-year average for a given commodity. Farmers will receive a payment if their actual crop revenue is less than the projected average.
      • County coverage option—Crop revenue is estimated using average county production.
      • Individual farm coverage—Crop revenue is estimated using farm production history.
  • If farmers do not choose a risk protection program by March 31, they will be automatically assigned to the PLC program.
  • To determine the best risk protection program, farmers should consider where they think prices are headed and what type of risk they are most concerned about—commodity prices or revenue.
  • The program farmers choose is locked in through the life of the farm bill—until 2018. Be sure to research your options so that you are confident in this long-term decision.
  • Decisions under the farm bill stay with the land regardless of whether the farm changes hands.

The University of Illinois is leading a project funded by USDA to inform farmers of their choices under the farm bill. Learn more about your options and take advantage of free tools, resources and webinars at the U of I Farm Bill Toolbox.

Stay tuned for the next episode of “Management Matters” and read our previous posts for additional insights into farm profitability:

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