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South Dakota Ag Connection - 11/15/2019

After one of the most challenging growing seasons ever, South Dakota farmers will have some important decisions to make when it comes to enrolling in federal programs.

South Dakota Corn and Farm Credit Services of America are partnering once again this year to help make those decisions easier by co-sponsoring a series of free GrowingOn presentations, featuring Steve Johnson, an Iowa State University farm and ag business specialist. Johnson will present "Vision 2020: The Road Ahead" on Dec. 2 in Aberdeen, Dec. 3 in Watertown and Dec. 5 in Sioux Falls. Registration is now open at www.growingon.com.

Johnson said he'll focus his presentation on decisions regarding the Agriculture Loss Coverage County (ARC-CO) and Price Loss Coverage (PLC) programs. Although the deadline to sign up for those programs isn't until March 15, Johnson said farmers should gather data and use an Iowa State University ARC/PLC payment analyzer to help with their decision.

"This should simplify the program enrollment decision that will likely come later this winter," Johnson said.

Under the 2018 farm bill, producers and farmland owners can sign up by commodity crop and by FSA farm number in either ARC-CO or PLC. Or, they can sign up an entire farm in ARC-Individual (ARC-IC). Those program elections will apply for the 2019 and 2020 crop years. Beginning in 2021, producers can change their program election and enroll annually.

Johnson noted that Congress made some subtle changes to the ARC and PLC programs. Payments will be for the county where the farm is located.

"Yields used to calculate the ARC-CO benchmark revenue will primarily come from crop insurance and those county yields will be trend-adjusted," he said. "As a result, use of the USDA Risk Management Agency (RMA) data will likely create larger yields and thus higher county benchmark revenue calculations."

In addition, the numbers used to calculate the county benchmark revenue by crop annually will lag by one year. Beginning with the 2019 crop, the 2013 through 2017 crop yields, national cash prices and benchmark revenues will be used.

Current reference prices for corn ($3.70 a bushel), soybeans ($8.40) and wheat $5.50), and reference prices for other commodities, remain the same as the 2014 farm bill and can't drop below those levels. However, if marketing year average (MYA) national cash prices were to move higher over the next few years, then the reference prices for ARC and PLC could increase as well. This effective reference price could increase by as much as 15% for commodity crops, but only after several years of much higher national cash prices.

USDA reminds producers that enrolling in ARC and PLC programs can affect eligibility for the Supplemental Coverage Option (SCO) crop insurance program. Producers who enroll for ARC are not eligible to purchase SCO on those insured acres. However, producers who enroll in PLC can buy an SCO policy through their crop insurance agent. This annual purchase must be made by March 15, which is the spring sales closing deadline for crop insurance.

The payments for PLC were non-existent for corn and soybeans in the 2014 and 2015 crop years. However, they increased during the latter part of that farm bill. Thus, Congress added the option for the 2018 farm bill for producers to switch programs annually starting in 2021.

Johnson said there are several moving parts to the ARC/PLC election and enrollment process. He said farmers should consider these seven steps to making their own ARC vs. PLC decisions.

"Use a notebook or folder and begin collecting important data this fall that can lead to your final election and enrollment decision this winter," he said.

- Find Your Farms' Base Acres and PLC Yield (Request from the county FSA office your FSA 156-EZ forms).

- Estimate Your County Yields for both 2019 and 2020 Crops.

- Project the National Cash Price Averages for both the 2019-20 and 2020-21 Marketing Years.

- Place this Information into an ARC/PLC Payment Calculator for your County.

- Compare by Crop, by Farm Number the Potential ARC Payments for both 2019 and 2020.

- Compare by Crop, by Farm Number the Potential PLC Payments for both 2019 and 2020.

- Consider Updating to a New PLC Yield using 2013 through 2017 Crop Production Evidence for that farm.

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