Base and Yield Update Tool

Developed by - Peter Zimmel
http://www.fapri.missouri.edu

President Bush signed the Farm Security and Rural Investment Act of 2002 into law on May 13, 2002. This new farm bill is the foundation for farm policy for the next six years. With this new farm bill comes decisions that producers must make. Producers have the ability to update their historical base acres and farm program yields. These were originally set based on the 1981 - 1985 years. Sign-up dates have not been announced, but producers will benefit by beginning now to evaluate the options.

By going to the FAPRI web site and pressing the Base & Yield Update Tool button, producers can download an Excel spreadsheet or use a web version to analyze their farms. These tools were designed to help educate producers on what the options are, as well as let them look at the potential financial differences between the options. The tool is not intended to be a recommendation as to which option you should choose.

The data required to run the tool are as follows:

• Total acres, acres enrolled in CRP or WRP, total double crop acres
• For each crop:
  • Historical base acres and program yields
  • Acres planted and yields for the 1998 - 2001 years

After entering the data, the user is able to look at a comparison of all the scenarios or more detailed information for each of the scenarios. This decision is made on a farm-by-farm basis. Therefore, if a producer is farming multiple FSA farm units, they need to analyze each farm. The FAPRI July 2002 Baseline prices are used in this analysis. Changes in prices can have an impact on Counter-cyclical payments.

The options for updating base acres and yields include:

• Retain your historical base and yields (Scenario 2)
• Retain your historical base and yields and add oilseeds (Scenarios 3 & 4)
  • If you were not 100% based before, add oilseeds to bring your base up to 100% (Scenario 3)
  • Elect to drop some historical base acres to add oilseed acres (Scenario 4)
• Update base acres to the average of 1998 - 2001 planted acres (Scenarios 5, 6 & 7)
  • Keep old program yields (Scenario 5)
  • Update counter cyclical payment yield (Scenarios 6 & 7)

Base acres and payment yields will be used to calculate direct payments and counter-cyclical payments. The Marketing Loan program is still in effect and will not be impacted by this decision. LDP payments are based on actual production in a given year, not base acres.

The decision to update base acres and payment yields will impact producer's income for years to come. Time spent understanding the implications will be well worth it!

The graphics below contain the input table and comparison graph from the Base & Yield Update Tool worksheet. The farm had 1200 acres of base under the previous farm bill (Scenario 1). Scenario 1 is a continuation of the 1996 farm bill with no supplemental payments. The farm benefits from all of the options available under the new farm bill (Scenarios 2-7). By choosing to update base acres to the average of 1998-2001 planted and considered planted acres, the farm is also able to update payment yields (Scenarios 6 & 7). These two scenarios result in the highest payments in each year, with Scenario 6 being slightly higher than Scenario 7. Average payments across the six years of the new farm bill range from a low of $41,000 under Scenario 2 to a high of $58,000 under Scenario 6.

Contact your local Extension Farm Management Specialist for further information upon the Farm Bill.

(Click here to view FAPRI web site where either a web version or an Excel file can be downloaded.)

Carroll County Example

Return to August 2002 Ag Connection Newsletter