Ag economists are preparing farmers for the new farm program sign-up and discussing the next round of trade relief payments at producer education meetings this fall.
Colorado State University extension specialists are currently hosting a series of farm bill training sessions that continue through early November. The last two meetings are scheduled November 8, the first at Lamar Community College, starting at 10 a.m., and the second at the Otero County Fairgrounds in Rocky Ford, starting at 3 p.m.
Enrollment in the new farm program continues through March 15. Enrollment for the 2020 crop year is due by June 30, but producers can enroll for both years during the same visit to their local Farm Service Agency office.
Following passage of the 2018 farm bill, producers have the option to enroll in one of two existing programs, Price Loss Coverage (LPC), or Agricultural Risk Coverage (ARC), with the added flexibility of being able to switch again in 2021, 2022 and 2023 if they so choose.
"One of the things we're telling producers is they have plenty of time, so don't make a decision right now. As we get more data, the comparison tools become more accurate," said Brent Young, CSU's farm business management specialist for northeast Colorado based at Sterling.
In 2014 and again in 2018, the farm bill allocated funding to two institutions, Texas A&M and Illinois State University, to develop on-line tools that producers can use to compare payment scenarios under the two programs. Producers can access those tools by visiting the Farm Service Agency's ARC-PLC webpage and clicking on the Resources link.
"I've had producers tell me they used the Texas A&M tool in 2014 and were actually able to go back in and use the same passwords and all of the information about their operation was still there, so they didnt have to re-input it," Young said.
In addition, K-State and Oklahoma State have developed their own spreadsheet to assist producers.
"I encourage producers to run them all. It doesn't hurt anything, and it will give you a bit of variation in the answer," Young said.
Generally speaking, early computer modeling appears to show that PLC will offer the highest payments in 2019 and 2020, Young said.
The way ARC payments are established, even if prices surge in 2020, that bump won't factor into the formula. That's because ARC is based on a five-year average, minus the highest and lowest price.
"In order to make a big difference in the payment, you would need two or three years of a price uptick or you have to be in a county that had a really substantially lower yield this past year," he said. "For producers who encountered floods and late planting issues and where the average yields are substantially lower, ARC might make a payment for 2019, but if you've had no yield issues in your area, PLC is probably your best choice."
The new farm bill also provides a chance for producers to update historical yields. That's significant, because it permits farmers to drop a poor year of production caused by drought, flooding or other weather-related issues, according to Amy Hagerman, a specialist in food and ag policy at Oklahoma State University who is also conducting a series of farm bill workshops this fall.
The closest one is being held on November 6 at Oklahoma Panhandle Research and Extension in Goodwell, and runs from 8:30 a.m. to noon.
The yield update provision appears to be a one-time opportunity with the new farm bill, she said.
"Producers have until next September to do that," she added.
Young noted that the Texas A&M online tool includes a module that allows calculations of what a yield update could mean for future payments.
"We certainly encourage farmers to run the tool and it will show them if it is worth their time to go through that process," he said.
In Colorado, another change that will improve the accuracy of production information stems from new data sourcing options.
"Now our yields can be calculated using RMA (Risk Management Agency) data," Young said. "RMA data is typically more accurate and more timely (than NASS-generated data) and hopefully that will give us a better county yield, especially for the ARC program, which is based on county data."
Farmers are also in the process of signing up for the second round of market facilitation payments, which are intended to compensate them for disruption to trade caused by ongoing trade disputes.
It pays out at a minimum of $15 an acre, but varies widely between counties, reaching as high as $115 an acre in some parts of Oklahoma, Hagerman said.
"It was designed a little bit differently this year," she said. "The large diversity in payments per county has created some confusion around the state."
Last year the program paid out at a national rate per commodity based on harvested production. This year all commodities were combined to form a single rate that is based on what was planted in each county. In both cases, payments were designed to favor crops hurt the most by the ongoing trade war.
That means higher payments in the Corn Belt and other regions that produce more of certain commodities like soybeans and hogs.
Young noted that most Colorado counties would be on the low end of the payment scale.
How the payments are calculated generated controversy from the start.
"A lot of people have complained about it, but they complained the first time around too," observed Rod Jones, an OSU agricultural economist who also farms in northwestern Oklahoma.
Jones believes the trade war with China had less impact on prices than most people think, attributing the low prices mostly to excess supplies and high carryover inventory.
"The impact was not a dollar a bushel (to soybean prices.) It might be 30 cents a bushel," he said. "The U.S. is still exporting a lot of soybeans."
"Trade flows have adjusted," he added. "I'm not here to argue there've been no impacts, but they have been less severe than people might have expected."
Young said producers are more satisfied with how the program was rolled out this time around.
"I do think most people feel like this second round, using a county rate, rather than individual production, might have been a little better way to do it," he said.
Young, who also farms with his family and is finished with silage harvest and preparing to harvest corn for grain, said it was hard to predict whether a third round of trade relief would be offered next year.
After talks concluded last week in Washington, President Trump announced negotiators had reached phase one of a new agreement, which he said would include $50 billion in agricultural purchases over the next couple of years. However, the agreement is not a done-deal until written out and signed.
If China does come back into the market for soybeans, it could reduce corn acres next spring and boost prices for both, Young said.