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Eric DeVuyst Sorts Through Farm Bill Decisions

Farmers have until Friday to update their yields and reallocate their base acres and just over a month to make their Farm Bill safety net program decisions. Oklahoma State University Ag Economist Eric DeVuyst said farmers need to look at both the Agricultural Risk Coverage (ARC) and the Price Loss Coverage (PLC) programs because there is no easy, clear cut decision.

DeVuyst said the ARC-County program will give farmers some yield and price protection, but it is based on county level revenues and it’s a five year moving average. He said that program drops out the high and the low average over those five years to average the remaining three years.   DeVuyst said if a farmers has successive years of low prices and low yields that will lower the benchmark and the maximum program payment. He said consecutive years of drought will negatively affect that benchmark.

PLC offers price protection and the 2014 Farm Bill set the reference prices. If a farmer has peanut base acres, DeVuyst said you probably don’t want to reallocate those acres and choose to enroll in PLC. He said the program offers an attractive target price to the current market price for peanuts. He said there is one negative aspect of PLC. If the drought spreads more nationally, then a producer could see poor yields with a high marketing prices. DeVuyst said so farmers end up with no safety net in that case.

DeVuyst said it hard to make general statements about either program, but ARC will likely protect farmers from low yields, while PLC offers no safety net with low yields but provides protection from low prices. He said it all comes down to what a producer can sustain for risk.

Radio Oklahoma Network Farm Director Ron Hays interviewed Eric DeVuyst,at the recent Canola College in Enid. Click or tap on the LISTENBAR below to listen to the full interview.

Landowners have until this Friday to decide if they will reallocate their base acres. DeVuyst said if a farmer has been growing canola they want to consider reallocating their base acres to canola. He said the price forecast for canola is showing several PLC payments, if the five year forecast holds up. There is one challenge to the reallocation. He said that decision is based on acres planted from 2008 - 2012. DeVuyst said most farmers have only been growing canola for a couple of years, so they will only be able reallocate a small percentage of their acres to canola.

Farmers may also consider updating their yields, which also must be done by this Friday. DeVuyst said most producers are no going to want to update their yields, but there is no cost to go into a FSA office and run the software to look at that option, but he encourages farmers to at least look at it in order to make the best decision.
 

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