What’s in the new farm bill and how does sorghum fit in?

There are many new provisions in the Agriculture Act of 2014, and National Sorghum Producers is working hard to make sure these provisions are implemented in a way that helps the sorghum farmer. NSP has developed implementation committees for several different titles of the farm bill and is working collaboratively with USDA through the rule-writing process. We are also working closely with other organizations to hold farm bill forums, presenting information about the Act across the country and be a resource to producers who have questions relating to the new law. We encourage growers to attend these sessions and stress education about the provisions is important. Below we have outlined some frequently asked questions, and we’ll continue to address new issues as we move through the implementation process. And as always, we welcome you to pick up the phone anytime and call NSP headquarters at 800-658-9808 with questions.

Q. What are all the acronyms?

  • PLC – Price Loss Coverage – Commodity program choice for producers that covers only price loss and allows producers to purchase SCO.
  • ARC – Agriculture Risk Coverage – Commodity program choice for producers that covers revenue loss with the choice of county or individual coverage.
  • SCO – Supplemental Coverage Option – New type of crop insurance that helps cover some of the producer’s crop insurance deductible.
  • STAX – Stacked Income Protection – New type of crop insurance for upland cotton that is area based.
  • APH – Actual Production History – Crop insurance yield history.

Q. Can base be increased?
A. Base can only be increased due to expiring or withdrawn CRP. Reallocation of base cannot result in an increase of base acres on the farm as of Sep. 30, 2013.

Q. What are payment acres?
A. Payment acres are the percentage of base acres that receive payment. For PLC and county ARC, that is 85 percent. For individual ARC, the percentage is 65 percent.

Q. What are generic base acres?
A. Generic base acres are cotton base acres on the farm as of September 30, 2013. Generic base acres cannot be reallocated, except on a yearly basis per the rules covered in the next question.

Q. If I plant a covered commodity on generic base acres, can I participate in PLC or ARC for that crop?
A. Yes. Acreage of a covered commodity (such as sorghum, corn or wheat) planted on generic base acres fall under that commodity’s PLC or ARC coverage (whichever is chosen in the original sign up period). While PLC and ARC are decoupled for standard base acres, these are coupled (they follow what you plant) for generic acres. For example: If a producer is enrolled in PLC for sorghum and enrolled in ARC for corn and plants both of these on generic base acres, then the generic base acres attributed to sorghum will be eligible for PLC and the generic base acres attributed to corn will be eligible for ARC. Attribution of generic base acres is on a pro rata formula between covered commodities.

Q. What do you mean by decoupled or coupled?
A. Decoupled means the PLC or ARC payment is NOT dependent on what the farmer plants. For example, a farm with ARC for corn and PLC for sorghum on base acres can receive payments for both ARC and PLC, if triggered for the respective crop when they plant only sorghum. The option to reallocate base acres is based strictly on the proportion of program crops planted between 2009 and 2012, but the decision may reflect attitudes toward future prices and which crop might trigger a payment under either ARC or PLC. Coupled payments are those for generic base where only planted acres determine an ARC or PLC payment.

Q. What is the impact of multiple farms owned by the same landowner with share agreements with multiple farmers?
A. Decisions relative to ARC and PLC are to be made by “all producers on a farm.” Each separate farm number stands on its own, and all the producers on the farm must agree on the decision. Producers are defined as those at risk, so landowners in a share rent arrangement are considered producers. The decisions to reallocate base and/or update yields are solely that of the landowner.

Example: Landowner A has three share arrangements with different farmers with three different farm numbers all in the same state: 1, 2 and 3. If A-1 chooses to go all PLC, then A-2 and A-3 could choose ARC. Then they must make a unanimous choice between county or individual coverage. In this example if producers A-2 and A-3 chose individual ARC, the revenue from farms A-2 and A-3 would be added together for Landowner A to determine his individual ARC payment.

Q. Is there a tie to base for SCO?
A. There is no base tie for SCO. SCO can be purchased on all acreage on a farm of commodities covered by PLC. However, SCO must be purchased in combination with an underlying crop insurance policy.

Q. Is a loss required on the underlying crop insurance policy to collect on SCO?
A. No. While you must have an underlying individual policy to purchase SCO, SCO losses are determined strictly by the county yield or revenue guarantee. For the highest level of SCO coverage (86 percent policy), the county must have at least a 14 percent loss to trigger an SCO payment.

Q. Can you purchase SCO and STAX together?
A. No. You can purchase either SCO or STAX on an acre by acre basis, but you cannot purchase both SCO and STAX on the same acre. In some cases where the producer’s APH is significantly better than the county yield used for STAX and SCO, SCO may be advantageous for cotton producers because, even though the indemnity paid will be triggered by the county loss, the actual indemnity will be paid based on the producer’s APH.