Published: July 23, 2008 04:39 pm            

Farm Programs: Sign up at FSA for 2008 DCP program through Sept. 30

Originally published in the July 11, 2008, print edition.

In last issue’s Farm Programs column, we covered some common questions regarding the “Food, Conservation and Energy Act of 2008.” This week we answer additional questions about what is more commonly referred to as the new farm bill.

Q: Has sign-up for the 2008 Direct and Counter-cyclical Payment program started yet at county Farm Service Agency offices?

A: Yes. Sign-up at FSA offices for the DCP program started on June 25 and continues until Sept. 30. Once farm operators are signed up for the 2008 program they will be eligible to receive the guaranteed direct payments for the 2008 crop year. The U.S. Department of Agriculture will issue an advance payment of 22 percent after program sign-up is completed, and will issue the final 2008 direct payment after Oct. 1.

Producers are also eligible for CCPs for the 2008 crop year; however, no CCPs are expected at this time for 2008 corn, soybeans or wheat, due to the very high level of commodity prices. Commodity Credit Corp. marketing loans will also be available for crops grown in 2008; however, there will not likely be any Loan Deficiency Payments available, again due to the high commodity prices.

Producers are encouraged to use patience in signing up for the 2008 DCP program, as most county FSA offices are still completing crop acreage reporting for the 2008 crop year.

Q: What are the DCP direct payment rates, acres, yields, etc. for 2008?

A: The direct payment rates will remain at the 2007 payment rates for 2008-2012, which are $.28 per bushel for corn, $.44/bu. for wheat, and $.52/bu. for wheat. Crop base aces and payment yields will also be continued at 2007 levels for 2008-2012, except for changes due to land additions or subtractions from year to year.

For 2008, the direct payment percentage will continue at the current level of 85 percent of crop base acres; however, the payment percentage will be reduced to 83.3 percent of base acres in 2009, 2010 and 2011. There will continue to be a 22 percent advance payment from 2008-2011, but no advance payment in 2012.

Q: What are the 2008 CCC loan rates that were recently announced by the USDA?

A: The national CCC loan rates for corn, soybeans and wheat will stay at the 2007 loan rates for 2008, which are $1.95/bu. for corn, $5.00/bu. for soybeans and $2.75/bu. for wheat. The corn and soybean national loan rates will remain the same for 2009- 2012, while the wheat loan rate will remain at $2.75/bu. for 2009, but will then increase to $2.94/bu. for 2010-1012. County loan rates for 2008 have also been announced, and most 2008 loan rates appear to be within a few cents of the 2007 county loan rates. County loan rates can be found at the following website: www.fsa.usda.gov/FSA/ webapp?area=home&subject=prsu&topic=lor

Q: When will the first payments be made under the new “permanent disaster” program?

A: The new Supplemental Revenue Assistance program — known as SURE — will be initiated for the 2008 crop year, and is intended to replace the need for passage of frequent “ad-hoc” programs after a natural disaster occurs.

According to the current language in the new farm bill, the first payments under the SURE program will not occur until after Oct. 1, 2009. Payments under the new disaster program will not be finalized until 30 days after the completion of the 2008 crop marketing year, which is Aug. 31, 2009. The new farm bill does not authorize the USDA to issue advance disaster payments after the 2008 harvest, and only allows a final payment after Oct. 1, 2009.

Some members of Congress in states hardest hit by the 2008 floods are already trying to adjust the legislation to allow for advance disaster payments for 2008. The USDA has not yet written the rules for the new SURE program.

Q: When will details be available for the new farm bill’s ACRE program?

A: The Average Crop Revenue Election program will be a new option for farm operators beginning with the 2009 crop year. The USDA will probably not have final rules for the ACRE program for a few months, since it is totally new. We do know that enrollment in ACRE will be “optional” for 2009; however, once a producer chooses the ACRE program, they must remain with it through the 2012 crop year.

The ACRE program will offer potential “revenue-based” counter-cyclical payments, which will be initiated in 2009 as an alternative to target prices and traditional “price-based” CCPs that existed in the 2002 farm bill, and will be continued for 2008. If a producer chooses ACRE in 2009, they must accept a 20 percent reduction in direct payments, a 30 percent reduction in CCC loan rates, and will not be eligible for any “price-based” CCPs.

We will have much more on the ACRE program CCP alternative, and comparisons to the current CCP program, in future columns.

Q: How will payment limits change under the ACRE program?

A: If a producer chooses the ACRE program option for 2009 and beyond, the direct payment limit of $40,000 would be reduced by a dollar amount to correspond to the 20 percent reduction in direct payments associated with the ACRE program. This maximum reduction would be $8,000. The payment limit reduction on direct payments under ACRE would be added to the CCP payment limit of $65,000, which would be the CCP payment limit under ACRE.

Many analysts are saying it is a “no brainer” for corn and soybean producers to sign up for the ACRE option for 2009 and beyond. Be sure to consider the payment limit implications as part of the ACRE program decision.

Q: What provisions in the new farm bill affect sugar producers?

A: The new farm bill increases the CCC loan rate for raw sugar cane by 0.25 cents per pound each year from 2009-2011, for a total increase of 0.75 cents per pound. The farm bill also sets the CCC loan rate for refined beet sugar at 128.5 percent of the raw cane sugar loan rate, beginning in 2009. It also creates a new program to utilize sugar that is in excess of human consumption needs, as feedstock for bioenergy production.

Q: What changes are in the new farm bill for dairy producers?

A: The current dairy price support program, which supports the farm-level milk price at $9.90 per hundredweight will continued in the new farm bill; however, there would be some minor changes in the USDA purchase prices of some specific dairy products. The Milk Income Loss Contract program goes through 2012, which compensates dairy producers when monthly milk price falls below a target price of $16.94/cwt. The MILC compensation will be set at a rate of 45 percent of the difference between the average monthly milk price and the target price, for up to 2.985 million pounds of annual milk production, both of which were increased from the last farm bill.

Q: What provisions in the new farm bill are related to County of Origin Labeling?

A: The new farm bill will require implementation of COOL food labeling, recordkeeping, and compliance requirements for meat, poultry, seafood, and produce by Sept. 30. Goat meat, chicken, ginseng, pecans and macadamia nuts were added to products covered by the COOL legislation. COOL affects all food sold at the retail level (grocery stores, etc.), but does not include food sold at restaurants. For a food product to be labeled “Product of the United States,” it must be born, raised and processed in this country; however, it would be permissible to have ingredients in processed products from outside the United States. The USDA is still completing the implementation rules for COOL.

Q: What are some of the provisions in the new farm bill’s energy title?

A: The 2008 farm bill includes an energy title for the first time. Most of the focus in the energy title continues to be on renewable energy, specifically the production of biofuels from newer technologies such as cellulosic, biomass and other sources. The farm bill creates several opportunities for grants and low interest loans for biorefineriries, producers and other businesses related to renewable energy. The tax provisions under Title XV of the new farm bill call for a cellulosic tax credit of $1.01 per gallon through 2012. The existing tax credit on corn-based ethanol would be reduced from the current rate of 51 cents per gallon to 45 cents per gallon, beginning in 2009. The existing tariff of 54 cents per gallon on imported ethanol would be continued through 2010. However, it should be noted that several livestock groups, food processors, members of Congress and others are calling for the ethanol import tariff to be reduced or eliminated to address the current energy issues that exist in the United States.

Q: Any changes in the credit title of the new farm bill?

A: The new farm bill increases the maximum loan limits to $300,000 for both direct operating loans and direct farm ownership loans through the FSA, which is the first increase in the maximum amount of FSA direct loans since 1986. The current limit for both FSA direct farm operating and direct farm ownership loans is $200,000. The new farm bill also enhances FSA lending programs for beginning and socially disadvantaged producers, as well as for producers of specialty crops and products.

Q: What are some of the farm bill’s key conservation provisions?

A: The new farm bill maintains the Conservation Reserve Program very similar to how it has been; however, the maximum CRP acreage will be reduced from 39 million acres to 32 million acres. Currently, there are slightly over 34 million acres under in CRP. The new farm bill permits authority to allow harvesting of biomass from selected CRP acres, and locating wind turbines on CRP land, associated with a corresponding reduction in CRP rental rates. The Conservation Stewardship Program will replace the Conservation Security Program under the new farm bill, and will allow for an additional 12.8 million acres per year to be enrolled under CSP. The new farm bill would expand funding for the Environmental Quality Incentives Program, but would reduce the maximum payment under EQIP from $450,000 to $300,000. The new farm bill will deny conservation program payments to any person with a 3-year average adjusted gross income of over $1 million, unless two-thirds or more of that income is farm-related income.

Q: What is the latest on an “early-out” option for existing CRP acres?

A: As of the writing of this column, the USDA was still reviewing the possibility of offering an “early-out” option for existing CRP contract acres for the 2009 crop year, in response to the current very tight grain supplies and the need for more acres of crop production in future years. The USDA is likely to make a decision on releasing existing CRP acres very soon, in order to allow adequate time for producers to plan for the 2009 growing season. Eligibility of CRP acres for the “early-out” option will likely be determined by the “environmental benefits index” assigned to each CRP contract. The other big question will be how many land owners will opt for an “early-out” option on eligible CRP acres, if that opportunity becomes available in the coming weeks. A big factor may be if the crop acres are eligible for all commodity farm programs under the new farm bill, and if all crop base acres and program yields are re-established.

Following is the listing of expiring CRP acres on Sept. 30 each year for the next five years:
• 2008: 1.2 million acres
• 2009: 3.9 million acres
• 2010: 4.5 million acres
• 2011: 4.4 million acres
• 2012: 5.6 million acres

Q: Are there websites to get more information on the new farm bill?

A: The USDA has a farm bill website at www.usda.gov/farmbill. There are also very comprehensive details of the new farm bill on the U.S. House website at http://agriculture.house.gov/inside/2007FarmBill.html. Several land grant universities have also begun to do some preliminary analysis of the new farm bill. Search the universities’ ag economics department websites for details.

        

• Click to discuss this story with other readers on our forums.