Faced with major choices stemming from the new federal farm program, farmers may be able to improve their decision-making with a computerized spreadsheet from the LSU AgCenter.
Under the new farm program recently passed by Congress, farmers have an opportunity to update their base acres and program yields, according to Mike Salassi with the LSU AgCenter’s Department of Agricultural Economics and Agribusiness.
Under previous farm programs, base acres and program yields were based on averages from 1981-85, Salassi said, explaining that the U.S. Department of Agriculture uses these values to calculate farm payments.
The new farm program will give farmers a one-time opportunity to change their base acres and program yields based on the averages of their 1998-2001 production, he said.
Salassi said farmers will have four basic options in deciding whether or not to update base acreage and yield. "If they do choose to update, they must update base acreage and program yield for every crop on their farms," he said.
Because there are so many variables, Salassi developed a computer program that allows producers to evaluate each option they have available and choose the one that places them in the best situation.
"It’s a spreadsheet that shows farmers what their estimated program benefits would be under each update option," Salassi said of the Excel spreadsheet program which analyzes farm base acreage and program yields.
"It’s important for farmers to look at the whole farm," the economist added. "Changes in base acreage as well as yield impact program payments. For example, a farmer may not choose to update if the reduction in base acreage — from lower plantings — would offset any gain in payment yield."
Salassi said farmers have to work with three sets of information — their crop base acreages and program yield, the estimated program payments per acre for each option and the estimated total program payments per farm.
"The decision to update will have to be made sometime in late summer or fall of this year," Salassi stressed, adding that any changes are permanent. "And they must do the whole farm."
Salassi said "whole farm" means each individual farm number identified by the Farm Service Administration. Many farmers, therefore, operate several of these farms, often with a different landowner for each.
"Growers need to use the best information available to decide on changes for each farm," Salassi said, adding the landowner, if different from the farmer, also must agree, because the decision will remain permanent for each of these farms — even if the operator changes.
The spreadsheet is designed for growers to enter their farm program and production information to determine optimal combinations, Salassi said.
The LSU AgCenter economist said that for each crop, farmers previously had one program yield on which government payments were based. The new farm program provides for both fixed payments and what are called "counter-cyclical" payments.
It’s the combinations of new and old acreage and yield bases and new payment structures that can become complicated, Salassi said. That’s why he developed the spreadsheet.
"One new feature of the farm program is that soybeans will now become a program commodity with the same benefits as crops such as cotton or rice," Salassi said. "Farmers who have a soybean planting history in 1998-2001 will be able to add soybean base to their farm even if they decide not to update other program crop acreages on the farm."
Salassi’s spreadsheet is available from parish offices of the LSU AgCenter as well as on the AgCenter’s Website at http://www.agecon.lsu.edu/FarmManagement.htm. Website visitors should click on "Farm Update Excel Worksheet" to download the program.
Mike Salassi: 225–578–2713 or e-mail: [email protected]
Rick Bogren: 225–578–5839 or e-mail: [email protected]