Frequently asked questions about new farm bill

Q: I am a tenant farmer who cash-leased land from a landowner between 1998-2001. Who makes the decision whether or not to update bases? If bases are updated, can the landowner receive a share of the payments?

A: The 2002 Farm Bill requires the landowner to make the election on updating bases. The landowner may share in the payments under a share lease, even though the landowner did not share in the crops from 1998-2001. If the land is cash-leased, the owner may not share in the payments.

Q: What should a producer wanting to increase bases do regarding the years 1998-2001?

A: Producers can choose to keep their current contract acres or update the bases using the average of the farm's 1998-2001 planted and prevented acres. To increase the base, the 1998-2001 average must be greater than the current contract acres.

Q: My farm was not in production for the previous five years. Am I eligible for direct and counter-cyclical payments?

A: No. Since the farm does not have a production flexibility contract and eligible crops were not planted on the farm from 1998-2002, the farm is ineligible for direct and counter-cyclical payments.

Q: If I have a history of double-cropping soybeans, will those acres be included in the bases of my covered commodities? Will this situation create bases that exceed the cropland? Will I be paid on these acres that exceed the cropland?

A: If your FSA state committee determines that double-cropping is a normal practice in your county, then the answer to all of your questions is yes.

Q: Can a farm that converted to row crop production in 2002 establish bases and yields?

A: Farms that do not have a current production flexibility contract or did not plant covered commodities from 1998-2002 cannot establish a base under the 2002 Farm Bill.

Q: Can producers establish bases from 1998-2001 planted history, even though these plantings were the same or lower than their current contract acres?

A: Yes. Producers may elect to establish a base on 1998-2001 plantings even though they are lower than the current contract acres. These producers will also be given the opportunity to update yields.

Q: Can I update my newly purchased farm's yields using the previous operator's bases and yields?

A: Yes.

Q: Can producers receive a direct payment regardless of the price of the commodity?

A: Yes.

Q: Can producers receive direct and counter-cyclical payments if the market price is higher than the target price?

A: Producers can only receive direct payments when the market price is higher than the target price.

Q: How are the payment rates for direct and counter-cyclical payments established? How will actual acreage payments determined? How will payments be capped?

A: The payment rates for direct payments are established by statute. The payment rates for counter-cyclical payments depend on the national average market price received by producers during the 12-month marketing year for the covered commodity.

The actual amount producers receive per base acre also depends on the payment yield established for the covered commodity for direct payments and the payment yield established for counter-cyclical payments. Payment limitations also apply to direct and counter-cyclical payments.

Q: How will the new county loan rates affect direct and counter-cyclical payments?

A: County loan rates have no impact on either direct or counter-cyclical payments. The national average loan rate is used to determine the effective price for counter-cyclical payments.

Q: Is a farm owner who cash rents entitled to payments?

A: No. An owner must be considered a producer on base acres in order to be eligible to share in direct and counter-cyclical payments. An owner who cash rents land does not meet the definition of a producer.

Q: Are farmers who double crop eligible for direct and counter-cyclical payments?

A: Yes. Direct and counter-cyclical payments will be made on base acres, not planted acres.

Q: How are base acres established for each farm?

A: Base acres are established using either of the following:

  1. The currently established production flexibility contract acreage for the farm and the eligible average of the planted and prevented planted oilseed acreage from 1998 to 2001; or
  2. The average of the 1998 to 2001 planted and prevented planted acreage of covered commodities.

[Note: In each crop year from 1998 through 2001, the oilseed acreage is limited to the planted (or prevented planted) oilseed acreage for the crop year, and the eligible acreage shall not exceed the difference between the total acreage of covered commodities and the total PFC acres.]

Q: Must producers continue to comply with sod/swamp provisions to be eligible for payments?

A: Yes.

Q: Does the crop have to be planted to receive direct and counter-cyclical payments?

A: No. Payments are based on historical plantings.

Q: Can farmers receive 100 percent of direct payments in advance?

A: No. The Farm Bill authorizes issuance of a 50 percent advance direct payments.

Q: If my farm has not participated in FSA programs before and has less than four years of cropping history, am I eligible for direct and counter-cyclical payments?

A: Your farm may be eligible for direct and counter-cyclical payments, provided that you reported the planted acreage of covered commodities to your local FSA office. Under certain circumstances, late filed acreage reports may also be accepted. Your base would be determined by adding up the acreage you planted to each covered commodity from 1998 to 2001and then dividing by four.

Q: Do landowners with cash rented land qualify for direct and counter-cyclical payments?

A: Landowners who cash rent their land are ineligible for direct and counter-cyclical payments because they do not meet the definition of a producer. The Farm Bill provides for making payments to producers. A producer shares in the risk of producing a crop and is entitled to share in the crop available for marketing from the farm, or would have shared had the crop been produced.

Dr. Bobby Coats is an Extension agricultural economist and farm policy specialist with the University of Arkansas.

e-mail: [email protected]

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