Generic Base and Farm Program Decision Aids

The Agricultural Act of 2014 had a substantial impact on the design of the American farm safety net. Such impacts to the commodity title included: allowing farms to redistribute historical base acres to reflect current plantings; eliminating the direct and counter-cyclical payment programs; and the creation of two new commodity support programs- the agriculture risk coverage (ARC) and the price loss coverage (PLC) programs. Perhaps to most significant impact is that cotton is no longer a program commodity eligible to receive ARC or PLC support. As such, cotton base acres are now termed generic base acres, with these generic acres subject to receiving program benefit if a covered commodity is planted to them. Like the 2008 farm bill, farm program payments remain tied to base acres of eligible commodities. As this reallocation decision is irrevocable for the five-year duration of the Act, the need for economic analysis into the payment potential of ARC and PLC commodity programs was imperative. Therefore, a determination of the base acre reallocation option is justified in terms of the intended plantings to generic acres and the associated program payment, if any. A Microsoft Excel spreadsheet was developed to assist producers in determining the composition of their base acres subject to their 2009-12 planting history (to include generic acres) as well as any future plantings. A series of Excel spreadsheets were then developed that allowed producers to compare the ARC-CO and PLC programs on a covered commodity-by-covered commodity basis.