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Authorizing New Base Acres for Current Program Products – AgFax

By on September 5, 2022 0

The 2002 and 2014 farm bills allowed for voluntary base acreage updating and reallocation options, respectively. Several people asked the lead author about the feasibility of another voluntary base acreage update that would specifically allow recently planted acreage for products covered by the program to be used to determine the total base acreage of a farm, including farms not registered in agricultural programs.

Authorizing new base acres for products in the current program is expensive. Using data from the 2019 to 2021 crop years, we estimate that this base update option would result in a 17% increase in base acreage for current program commodities. An increase of this size would likely require either that the addition of new base acres be scaled down or that a funding source be identified before it is seriously considered.

Acres planted

Acres planted in Covered Commodities averaged 253.1 million during the 2019-2021 crop years (see Figure 1). These agricultural campaigns fall under the 2018 agricultural law and have complete data. The source of planted acres is the Quick Stats database maintained by USDA, NASS (US Department of Agriculture, National Agricultural Statistical Service).

Products covered are barley, canola, crambe, corn, large and small chickpeas, dry peas, flax seeds, lentils, mustard, oats, peanuts, rice, rapeseed, safflower, seed cotton, sesame, sorghum, soybeans, sunflower and wheat. Acres planted with crambe and sesame, two small acreage crops, are not reported in Quick Stats.

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Considered planted

Base acreage includes the acreage considered planted for a program commodity in a year. Specifically, they include areas that cannot be planted due to conditions beyond the farmer’s control, including weather (farm bill 2014). Using data from USDA, FSA (Farm Service Agency) (August 2022b), prevent the planting of covered commodity acres by an average of 10.7 million per year over the period 2019-2021 (see Figure 1).

Basic Acres

Using FSA data (August 2022a), base acreage enrolled in commodity programs averaged 252.5 million per year over the period 2019-2021 (see Figure 1). However, not all base areas are planted with covered products. Farmers have the freedom not to plant base acres or to plant them for other crops, with some restrictions largely related to fruits and vegetables. According to data provided by the FSA (August 2022c); 219.8 million registered base acres were planted for Covered Commodities during the 2019-2021 period (see Figure 1).

Summary

Recently planted acreage plus seeded acreage of covered commodities is 44 million (263.8 – 219.8) greater than the current base planted acres of covered commodities (see Figure 1).

The previous conclusion implies that, if farmers were allowed to sign acreage recently planted in covered commodities but have no base, base acreage for current program commodities could increase by 17% (44 million / 252.5 million).

If we assume that new base acres have the same distribution as existing base acres across products and program states, a 17% increase in base acres results in a 17% increase in budget costs ( i.e. commodity program payments). The May 2022 Congressional Budget Office (CBO) baseline projected spending of $48 billion for agricultural risk hedging and price loss hedging programs in fiscal years 2023-32, implying a $8 billion (17% times $48 billion) increase in federal budgetary cost over 10 years. years, the period used to account for agricultural program expenditures.

An increase approaching the estimate in the previous point is large enough that the addition of new base acres for current program commodities will likely need to be reduced or a funding source identified before seriously considered.

Discount options include, but are not limited to:

  1. limit (i.e. cap) the number of acres that could be added as new base acres to current program products,
  2. requiring the new base acreage to be in program proceeds with the lowest projected payment per acre over the term of the authorizing farm bill,
  3. authorize new base acres on a farm to the extent that they can be funded by reallocating existing base acres on that farm to schedule commodities with a lower expected payment during the term of the authorizing farm bill (i.e. say the farm is gaining base acres but no planned increase in payments), and
  4. The base acreage of an updated farm should reflect newly planted program commodities (i.e. the previous distribution of base acreage among program commodities is eliminated).

One issue that may arise with a new base acre update to current program commodities is that some farms, perhaps many, will not have a new base acreage. The planted and base areas are the same. Additionally, recipients of a new base acreage update may vary by state and crop. Would Congress therefore find it fair, perhaps even politically necessary, to offer another benefit to farms that have a maximum base acreage, thus further increasing the cost of adding new base acreage to the products of the current program? ?

Carl Zulauf, Jonathan Coppess, Gary Schnitkey, Krista Swanson and Nick Paulson