Montana and the 2018 farm bill

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Well, it’s farm bill time again.  While legislation was passed late last year, many of the implementation details are still being worked out.  I spent a few days last week in Kansas City at the Extension Risk Management Education Farm Bill conference.  I learned plenty about the new bill, what other states are doing, and even had the opportunity to share some insights from Montana.

Much remains the same in the 2018 bill as compared to 2014.   But, a number of items interested me.  I’ve listed a few of those here, with more to come in future posts:

No base acreage reallocation. (If you’re not familiar with base acres, the concept is not entirely straightforward.  You might brush up on information about base acres, among other definitions, here). This may be of interest to Montana producers because there have been some large acreage shifts in the state.  Pulse crops (lentils, dry peas, and chickpeas) have increased substantially.  While Montana did increase pulse base from around 35,000 acres in the previous farm bill to approximately 250,000 base acres of pulse crops in 2014, actual acreage planted in pulses has now inched up over 1 million acres.

 —Program elections can change course. In this farm bill, producers once again elect into a program–ARC or PLC–designed to provide payments in differing circumstances.  (Details on those programs here.)  Producers will make an ARC/PLC choice for 2019 and 2020, but after that, can switch programs every year. During the last farm bill, program election was a one-time event.  Decisions involved a multi-year analysis of projected prices and yields.  This time around, participants can weigh pricing versus yield concerns on an annual basis.

(To recap, PLC provides a payment if national prices fall below a set level. There are two types of ARC. ARC-County, or ARC-CO, provides a payment if average county revenues fall below a benchmark based on averages. ARC-Individual, or ARC-IC pays if a measure of individual farm revenues fall below a similar average benchmark calculation, but paid on fewer base acres.)

–ARC-IC remains. ARC-Individual was something that Montana producers advocated for in the last farm bill.  Concern that county average yields would not reflect those of individual farms in large counties variable production conditions prompted the creation of ARC-IC.  ARC-IC is based on actual farm production rather than historical base acres and county average production.  However, ARC-IC pays on 65% of total base acreage, rather than 85%, as in the cases of ARC-CO and PLC.  Given that base acres cannot be reallocated, this is one opportunity for producers to elect programs covering crops they actually grow.

–Decision tools will once again be available. Both the University of Illinois and Texas A&M are at work creating web-based software to help in decision making.  They estimate releasing the tools in the fall, at the earliest. Stay tuned.

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About Author

Kate Binzen Fuller is an assistant professor and extension specialist in the Department of Agricultural Economics and Economics at Montana State University. She holds an M.S. and Ph.D. from the University of California, Davis. Her extension and research program focuses on the economics of farm management decisions, including USDA programs and policies, pest and disease responses, and issues surrounding leasing and land values. Kate’s extension program takes her on the road often, resulting in a rapidly expanding knowledge and appreciation for Montana’s interstates, highways, and (especially) gravel roads.

2 Comments

  1. Thank you for your report. I would be interested to hear in future posts if there is any truth to the rumor that in order to be eligible for future PlC/ARC payments that you will need to grow the covered crop on your base acres? For example, I farm in western SD, but like a lot of MT producers I grow forage on my corn/barley base acres. I still get the payments under the “Freedom to Farm” model but I hear that may change. I’m sure MT producers are growing lentils or forage on a barley/wheat base acres and I hope for all of our sake that does not change. Be interested to hear what you find out. Thanks.

    • Hi Jim,
      Sorry to be slow in my response–I missed the alert I received on your comment. While I’ve heard this rumor as well, so far, it remains just that. One potential barrier to requiring base acreage to match production is a World Trade Organization agreement, of which the U.S. is a part. Countries involved pledge to reduce agricultural subsidies that distort production and trade. If farm policy incentivizes farmers to plant a different crop, that could be argued a distortion. Basing payments on historical acreage, and not current, is one way to get around this. (You an read more on the WTO’s website, here: https://www.wto.org/english/tratop_e/agric_e/agboxes_e.htm.).

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