The National Center for Peanut Competitiveness has issued a brief overview of how a peanut base will be considered on the Farm under the 2014 Farm Bill. At the request of many, here is the summary:
- Potential payments for the Price Loss Coverage (PLC) and the Agriculture Risk Coverage (ARC) programs are paid on the farm’s bases associated with a covered commodity.
- Covered commodities are wheat, oats, and barley, corn, grain sorghum, long grain rice, medium grain rice, pulse crops, soybeans, other oilseeds, and peanuts.
- Cotton is not a covered commodity in the 2014 Farm Bill. Cotton has the STAX program and is not part of the PLC or ARC programs.
- All bases (i.e., all covered commodity’s base and cotton base) on a farm as of September 30, 2013 stay in effect under the 2014 Farm Bill.
- Base holders can either retain the current farm base or take a 1-time reallocation of covered commodities’ base acres.
- If taking the 1-time reallocation, the 4-year average 2009-2012 crop years’ planted acreage will be used.
- A farm’s reallocated base cannot exceed the farm’s base on record as of September 30, 2013.
- Cotton base is being renamed “generic” base and stays permanent during the life of the farm bill.
- Cotton base (i.e., generic base) cannot be used in the 1-time reallocation of covered commodities’ base acres nor updated.
- Generic base is assigned on a per crop year basis to a covered commodity that is planted on the farm. It is a temporary base. After the season, the temporary covered commodity base goes away. Thus, the generic base (i.e., cotton base) does not change. The following crop season the process is repeated.
- For a given crop year, the farmer’s covered commodity (e.g., peanuts) base will be the sum of the current base assigned to that covered commodity plus any generic base that is temporarily assigned to that covered commodity (e.g., peanuts).
- Payment acres for price loss coverage (PLC) or agricultural risk coverage (ARC) with the county option will be 85% of the base acres for that covered commodity.
- Payment acres for agricultural risk coverage (ARC) with the individual option will be 65% of the base acres for that covered commodity.
Example: 200 acres of cropland on the farm
100 acres of cotton base; 50 acres of peanut base; 25 acres of corn base and 10 acres of wheat base: The farm has 185 total base acres out of 200 cropland acres – as of September 30, 2013. On day 1 of the 2014 Farm Bill, the 100 acres of cotton base is reclassified as 100 acres of generic base. All of the other commodity bases stay the same. On this farm, it has 100 generic base acres and 85 covered commodity crop base acres which are the sum of the peanut base, corn base and wheat base.
If the farmer decides to do the 1-time reallocation, only the 85 covered commodity crop base acres can be reallocated but no increase above the 85 base acres is allowed. Furthermore, the 100 generic base acres (previously identified as cotton base) cannot be updated nor permanently reallocated. The farmer could opt not to reallocate and just retain current farm base. We assume that the farmer just retained the farm’s current base for the rest of this example.
In 2014, farmer plants 70 acres of peanuts, 20 acres of corn, 20 acres of grain sorghum, 20 acres of wheat for a total of 130 acres of covered commodities. The farmer also plants 70 acres of cotton: all 200 acres are planted to either cotton or one of the covered commodities.
The farmer’s total planted acres of the covered commodities for 2014 is 130 acres, which is more than the 100 generic base acres on the farm. Of the 130 acres planted in the covered commodities, 53.8% was planted to peanuts, 15.4% planted to corn, 15.4% planted to grain sorghum, and 15.4% planted to wheat.
The farmer can use the 100 generic base acres assigned to the farm and temporarily allocate those base acres to their planted covered commodity in proportion to the share of the covered commodity’s planted acres to the sum of all of their planted covered commodities’ acreages.
In this example, the farmer would temporary allocated 53.8 generic base acres to peanuts (i.e., 53.8% times 100 generic acres), 15.4 generic base acres to corn, 15.4 generic base acres to grain sorghum and 15.4% generic base acres to wheat.
The sum of the temporarily assigned generic bases cannot exceed the total generic base assigned to that farm. For the 2014 crop year, the farmer has 103.8 acres of peanut base, 40.4 acres of corn base, 15.4 acres of grain sorghum base and 25.4 acres of wheat base. Generic base acres can only be temporarily assigned to a covered commodity that was
planted for that year. In 2014, if any payments occur under the PLC or ARC programs, the farmer will be paid on a portion of their total base (i.e., payment acres) assigned to the respective covered commodity. This process is repeated each crop year.