The most complex farm legislation ever written needs to be implemented, and the clock is ticking. The legislation reduces the uncertainty to row crop producers caused by a weakened global economy. The challenging feature of the new law allows producers the option of updating historical average bases and crop yields to determine program benefits.
On Oct. 4, USDA announced the availability on their web site of a web-based decision aid tool, called the Base and Yield Update Option Analyzer (BYA). The BYA software developed by James Richardson, Joe Outlaw, and Steven Klose with Texas A&M University’s Agricultural Food and Policy Center (AFPC) in conjunction with USDA’s Farm Service Agency (FSA).
The authors in their BYA software documentation manual make the following points:
- The Base and Yield Update Option Analyzer (BYA) is a decision support tool for analyzing the economic consequences of the Base Acre and Payment Yield update options in the 2002 farm bill.
- The BYA is provided by Texas A&M University for educational purposes and is not intended to replace or duplicate the final FSA calculations done for individual farm numbers.
- The 2002 farm bill offers farmers a one-time opportunity to update base and payment yields.
- The BYA provides a comprehensive system for evaluating the economic consequences of selecting different update alternatives for each farm number before going to the FSA office.
- The 2002 farm bill’s base acre and program yield update opportunity is complicated by two factors: (a) the large number of options producers have been given, and (b) the fact that the counter-cyclical payment (CCP) is uncertain (risky) because it is based on a fixed target price and the fluctuating market price. This means that the CCP for a crop in any year can be anywhere between zero and the maximum.
The option’s producers have been given are summarized as:
– Base acre update options:
1. Retain 2002 production flexibility contract (PFC) acres for all years.
2. Retain 2002 PFC acres and add oilseed base acres without offsetting PFC acres.
3. Retain 2002 PFC acres and add maximum oilseed base acres with maximum offset of PFC acres.
4. Update base acres for all crops using 1998-01 average planted acres.
5. Retain 2002 PFC acres and add oilseed base acres with offset to maximize expected government payments.
– Payment yield options
6. Freeze 2002 PFC payment yields for non-oilseed crops and do not develop PFC payment yields for oilseeds.
7. Freeze 2002 payment yields for non-oilseed crops and establish payment yields for oilseeds.
8. Establish payment yields for all crops using 70 percent of increase in yield over 2002 PFC payment yield.
9. Establish payment yield for all crops using 93.5 percent of the weighted average of 1998-2001 yields.
The acceptable combinations of the five base acre options and four payment yield options, gives producers seven alternatives to choose from:
– Permitted Base Acre and Payment Yield Update Alternatives
A. Retain 2002 PFC acres and payment yields and do not add oilseeds.
B. Retain 2002 PFC acres and add oilseed base acres without offset, freeze non-oilseed 2002 PFC yields and establish oilseed payment yields.
C. Retain 2002 PFC acres and add oilseed base acres with maximum offset, freeze non-oilseed 2002 PFC payment yields and establish oilseed payment yields.
D. Retain 2002 PFC acres and add oilseed base acres to maximize government payments, freeze non-oilseed payment yields and establish oilseed payment yields.
E. Update all base acres, freeze non-oilseed 2002 PFC payment yields and establish oilseed payment yields.
F. Update all base acres and establish payment yields for all crops using the 70 percent formula.
G. Update all base acres and establish payment yields for all crops using the 93.5 percent formula. Producers are allowed to update base acres and establish payment yields using a different option for each farm number. The formula selected for establishing payment yield must be the same for all crops on a farm number.
James, Joe and Steve have developed an outstanding decision aid tool that will provide producers with options for estimating farm bill program payments and help them make informed decisions.
Producers wanting to receive direct and counter-cyclical payments may now sign up for the 2002 and 2003 crops. Producers have until April 1, 2003, to select base and yield options and until June 2, 2003, to sign up for the direct and counter-cyclical program.
Payments will be made to eligible producers after they make their base and yield selections and enter into a contract to participate. Covered commodities include wheat, corn, sorghum, barley, oats, upland cotton, rice, soybeans, sunflower seeds, canola, flaxseed, mustard, safflower and rapeseed.
Direct payments for covered commodities are made, regardless of market prices, to producers who have established crop bases and payment yields.
Counter-cyclical payments are issued only if effective prices are less than the target prices set in the 2002 farm bill.
Producers who do not have access to the Web or have questions about the direct and counter-cyclical program and their options should contact their local FSA office.
Given the complexity of the enrollment decision, producers are also advised to consult with their local FSA office before reaching any final conclusions about their choices.
FSA’s web site location for the Base and Yield Update Option Analyzer (BYA) http://www.fsa.usda.gov/pas/farmbill/default.asp
e-mail: [email protected]