The Farm Service Agency maintains a question and answer section on their web page. Here are some answers to a few of the latest questions being asked about direct and counter-cyclical payments:

Q:What production evidence is required to update yields?

A: Under the new Farm Bill, eligible farm owners who elect to update their farm base acres may also update the farm yields. Oilseed farm owners also may establish a yield for direct and counter-cyclical payments.

In general, owners who wish to establish or update yields must have actual verifiable production evidence such as weight tickets, loan deficiency payments (LDPs), crop insurance appraisals, or sales records. The vast majority of producers will use this approach to verification.

Some crops, however, are harvested or utilized in a manner that does not result in tangible records of measurable production. This includes crops that were grazed, harvested as silage or hay, or fed on the farm. In these situations, previous LDPs on record at FSA county offices may be used to establish farm yields. When LDPs are unavailable, but crop insurance records or other FSA records indicate the crop was grazed, harvested as silage or hay, or fed on the farm, then FSA may assign a yield based on the actual grain yield for three similar farms. In cases when owners cannot meet any of these requirements, or they have experienced abnormally low yields, then 75 percent of the county average yield will be used, as specified in the Farm Bill.

Owners selecting the yield update option will need Form FSA-658P (Producer's Record of Production) to list the sources of the production evidence. The actual documentation does not have to be produced at the time the option is selected. However, the production evidence will have to be provided at a subsequent time if required under spot-check procedures.

FSA county offices will begin accepting yield updates in mid-September, 2002. On October 1, producers can apply for the direct and counter-cyclical payment program. All applications for updates must be received before April 1, 2003.

Producers who reported yields for crop insurance purposes must report the same yields for the direct and counter-cyclical program. They do not have to provide the FSA county office with production evidence at the time of signup, but would subsequently if subject to a spot-check.

Q: What documentation will farm owners need if they choose to update their bases?

A: The majority of farm owners and operators filed acreage reports with FSA in each of the 1998 through 2001 crop years. If all acreage of covered commodities planted and prevented from being planted is a matter of record with FSA, no additional information is necessary. Base options for farms will be calculated using these records. Owners or operators who did not timely file an acreage report may do so at this time without paying a late-filed fee. In these cases, owners or operators may submit records to document the existence and/or disposition of the crop. Such records include seed receipts or other sales evidence, crop insurance records for prevented plantings, appraisals, or other records that substantiate that the crop was planted or prevented from being planted.

Q: Can farmers leave ground unplanted and use their 2002 production flexibility contract acres to receive direct and counter-cyclical payments?

A: Yes, farmers may leave ground unplanted and use their 2002 production flexibility contract acres to receive direct and counter-cyclical payments.

Q: Certain provisions of the 2002 Farm Bill require a yield to be assigned to the farm. Who assigns that yield and how is that yield determined?

A: FSA county committees will be responsible for assigning yields. Using their knowledge of local farming practices, county committees will assign a yield based on at least three farms with similar agronomic and climatic conditions.

Q: Must landowners who have granted power of attorney authority to their tenants sign a new power of attorney form?

A: Yes. The 2002 Farm Bill includes many changes to existing programs and adds several new programs which were not contemplated or covered in the power of attorney (POA) authority required under the 1996 Act. For example, in 1996 there was no peanut quota buyout program; no milk income loss contract program; and no wool, mohair, or honey programs. In addition, former production flexibility contracts have been replaced with the new and innovative direct and counter-cyclical program. Just as importantly, the new law gives landowners the option to update bases and yields for the first time in 15 years. None of these very major programs, provisions, or options was in any manner referred to in the earlier POA authorities, making the old ones obsolete from both a business and legal standpoint.

Requiring new POAs makes good business sense. It affords each landowner the opportunity to examine their current business needs – particularly with respect to new program provisions and the various options available – and to reassign decision-making responsibility on the landowner's behalf.

FSA is currently sending the necessary POA forms directly to landowners. The forms should be signed by the landowners and returned directly to FSA.

USDA’s Frequently Asked Questions and Answers about the 2002 Farm Bill is located at the following web address. http://www.fsa.usda.gov/pas/farmbill/fbfaqhome.asp

Dr. Bobby Coats is an Extension agricultural economist with the University of Arkansas.e-mail: rcoats@uaex.edu