Farm Payment Calculator
A major change to the 2008 bill is a new market-based state
level crop revenue protection program, which is based on the five-year state
average yield and the rolling two-year national average price.
To assist producers in navigating this new safety net option, economists at
the University of Illinois, Ohio State University, Mississippi State
University and Iowa State University have developed a Farm Payment
Calculator. This tool can be used to determine how various programs
will impact a producer's farm income.
Download Farm Payment Calculator (Excel software is required):
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Average Crop Revenue Election
While maintaining programs authorized in the 2002 Farm Bill with minor
changes, the new Commodity Title offers the Average Crop Revenue Election
(ACRE) program beginning with the 2009 crop year. This program will
make payments to producers when the actual state revenue for the commodity
is less than the revenue guarantee.
Producers will continue to receive direct payments, but
at a 20% reduction in rate compared to previous farm programs. They
also will remain eligible for non-recourse marketing loans, but at a 30%
reduced rate.
To receive an ACRE payment, two triggers must be met.
First, the actual state revenue
for the crop must be less than the state revenue guarantee amount.
Second, an individual's actual revenue for the crop must be less than the
farm's benchmark revenue. Benchmark yields at the state and farm
levels are Olympic averages of the most recent five years.
If both triggers are met, a producer will receive an ACRE payment calculated
as the difference between the state's actual revenue and the ACRE guarantee
per acre, multiplied by a percentage (83.3% or 85% depending on the crop
year) of the farm's planted acreage, but prorated based on the individual
farm's yield history compared to the state's yield history.
The maximum payment is limited to 25% of the state ACRE guarantee. A
producer's total number of planted acres for which he may receive ACRE
payments may not exceed the total base acres for the farm.
Crop Insurance Pilot Program
Enhances Policies
This pilot program will offer a greater incentive for
producers to convert their optional and basic units crop
insurance coverage to higher levels of coverage for
enterprise and whole farm units. To address the
current disparity in premiums between the units of coverage,
the pilot program will provide policy holders with
enterprise or whole farm unit coverage for the same premium
subsidy per acre that would otherwise have been paid for
basic or option unit coverage for the covered crop.
The amount of the premium to be paid by the Federal Crop
insurance Corporation, though, may not exceed 80% of the
total premium for the enterprise and whole unit policy.
Environmental Quality Incentives
Program (EQIP)
The EQIP offers financial and technical help
to assist farmers and ranchers install or implement
conservation practices on eligible agricultural land to
protect water, air and soil quality and the wildlife
habitat.
In the 2008 Farm Bill, EQIP funding was
increased by $3.4 billion and the evaluation process for
applications was improved to offer greater incentives for
producer participation. Additionally, the new rules
established the Agricultural Water Enhancement Program
(AWEP) to help producers achieve water quality goals and
address water quantity concerns.
Stronger Payment Limitations
The new program imposes a cap on average
adjusted gross income (AGI) for eligibility to receive farm
program payments. The hard cap on non-farm income is
$500,000, with a new cap on farm income placed at $750,000,
above which a producer will no longer be eligible for direct
payments.
The total payment cap for direct and
counter-cyclical payments for a single farmer is set at
$40,000 and $65,000 respectively. For producers who
participate in ACRE, the limit on direct payments will be
reduced by the dollar amount that direct payments are cut.
Their limit on counter-cyclical and ACRE payments will be
increased by the same dollar amount.
FSA Farm Storage Facility Loan Program
The 2008 Farm Bill brings much-needed updates
to the Farm Service Agency (FSA) farm storage facility loan
program. Loan amounts are now authorized for up to
$500,000, compared to the prior limit of $100,000. The
term of the loan may be up to 12 years; the prior maximum
tenure was 7 years. Another improvement requires the
Secretary of Agriculture to provide partial disbursement of
the loan principal to facilitate purchase and construction.
There are also some changes on
securitization. FSA will no longer be able to require
a severance agreement from a prior lien holder on the real
estate parcel if there is an increase in down payment or
other acceptable security provided. FSA will also have
to offer the option of allowing a sub-parcel of real estate
to be used as collateral, subject to approval of the
Secretary.
