“If you stay with current AMTA acreage, you will not be eligible for fixed or counter-cyclical payments for soybeans. Only if you update to recent planting history would you establish a soybean base…”
Growers could have a very important decision to make this fall, if a draft farm bill passed by the House Agriculture Committee becomes law.
Under the proposal, farmers can elect to use their base historic acres for their farm (on which AMTA payments are based) or update their base, using an average of planted acreage for all crops on their farm from 1998-2001. This is where things can get a bit sticky.
“If farmers choose to update, they have to update for all crops,” said Gary Adams, with the Food and Agricultural Policy Research Institute (FAPRI). “They can't pick and choose.”
In addition, “If they choose to stay with current AMTA acreage, AMTA acres for soybeans are zero,” Adams said. “So if you choose to stay with current AMTA acreage, you will not be eligible for fixed or counter-cyclical payments for soybeans. Only if you choose to update to recent planting history would you establish a soybean base, if you had been planting soybeans between 1998 and 2001. The base would be equal to those average plantings.”
Producers would have to look long and hard at their operations this fall and crunch the numbers to see whether they're better off staying with their current base or if they want to update.
There are bound to be some tradeoffs.
“If producers had been under-planting the base acres of another crop over the last four years — say corn — while planting soybeans, then they would have to give up some corn to get those additional soybean base acres,” Adams said.
But it's not always going to be the soybean decision that drives producers to update or not update.
“For farmers who have expanded their cotton base in recent years, their updated cotton base may be larger than what it was coming out the last farm bill. They may want to update just to give them the opportunity to (increase) their cotton base.
“And some farmers in the Missouri Bootheel may want to update because they've expanded their plantings of rice.”
But whatever you do, remember, if you don't update, you won't have a soybean base.
The proposal retains planting flexibility and does not include a set-aside provision. However, there are provisions to discourage production beyond base acres, according to Adams.
“Farmers are not paid on actual production or total production,” Adams said. “They're paid on 85 percent of their base acres times program yield.”
FAPRI also projects that the proposal “would marginally increase acres planted to grains and cotton while reducing acreage of soybeans and other oilseeds.”
According to FAPRI analysts, the proposal would increase net farm income by $4.1 billion per year from 2003 to 2010. In addition, the proposals would increase government expenditures through the Commodity Credit Corporation by an average of $4.8 billion per year.
According to Adams, “The introduction of the counter-cyclical payments based off of the target prices certainly adds more income back to crop producers. Across all crops, we're looking at additional income of roughly $17 per acre. Of course, that's going to vary as you go across crops.”