Implementation of The Food, Conservation, and Energy Act of 2008

No points are final until publication of the final rule by USDA

The Food, Conservation, and Energy Act of 2008 includes many items of interest to Kansas wheat growers. None of these points are final until publication of the final rule by USDA. These notes are provided as 'food-for-thought' to wheat growers considering participation in the programs.

• Direct Payment: The wheat direct payment rate will remain at 52 cents per bushel, but direct payments will only be paid on 83.3% of base acres in 2009, 2010 and 2011. In 2008 and 2012, direct payments will be paid based on 85% of base acres. Additionally, direct payments will be capped at $40,000 per individual. There are 1.75 million farms are approved & enrolled for direct payments. During the week of October 5, 2008, the balance of $4.3 billion in 2008 DCP payments were issued. 2009 Advanced payments (22%) will be mailed in December 2008 to those who have enrolled. The bulk of that funding will go out in calendar year 2009 as most producers do not sign up until after the first of the year.

• Rebalances Target Prices and Loan Rates: The bill adjusts loan rates and target prices of existing commodities beginning with the 2010 crop year and provides additional program coverage for certain pulse crops beginning with the 2009 crop year.

• Average Crop Revenue Election (ACRE) Program: Producers will have the option, beginning with the 2009 crop year, to participate in a state-level revenue protection system. Participants agree to a 20 percent reduction in direct payments and a 30 percent reduction in loan rates. In return, they are eligible for a state-based revenue guarantee on acres planted equal to 90 percent of the product of a state average yield factor times the national average price for the previous two years for the commodity. All producers (landlords too) on the farm must agree to participate in ACRE (sign up by FSA farm number). Enrollment into ACRE will be very similar to DCP enrollment by producers initiating an ACRE contract for the farm and is expected to begin in spring 2009. Enrollees must concede to a 20 % reduction in direct payments & 30% reduction in marketing assistance loan rates. A useful chart on the triggers necessary for a payment under the the new, optional, Average Crop Revenue Election (ACRE) is provided here.

• Supplemental Revenue Assistance Program (SURE): The bill includes a disaster assistance program to assist farmers who lose their crops, livestock or trees or suffer from shallow losses due to disasters such as floods or drought. The program complements the existing crop insurance program by providing additional assistance to farmers based on loss of crop revenue for their whole farm operation. The additional payments are based on their level of losses compared to a benchmark proportional to their level of crop insurance coverage purchased at the beginning of the crop year.

• Conservation Reserve Program (CRP): The maximum enrolled acreage will be reduced from 39.2 million acres to 32 milliion acres in 2010. Alfalfa, multiyear grasses and legumes, when grown as part of a rotation practice is considered an agricultural commodity for the purpose of the 4 to 6 year cropping history criteria. Managed harvesting of biomass is allowed subject to the purposes of CRP and soil, water and wildlife considerations. If the biomass is sold, the Secretary reduces the CRP rental payment in an amount commensurate with the economic value of the product sold. Allows retiring farmers or ranchers to modify their CRP contracts to sell or lease it to a beginning or socially disadvantaged farmer or rancher, who then, subject to many conditions, put it into production. The new transition program for beginning farmers and ranchers will apply to both old and new contracts.

• Biomass Crop Assistance Program (BCAP): Supports the establishment and production of crops within project areas for conversion to bio-energy. Project areas are selected through an application process. Producers enter into BCAP contracts, 5 year for annual and perennial crops and 15 year for woody biomass. Producers within project areas may receive cost share payments for establishment, annual rental payments and/or payments for harvest, transportation and storage. Implementation of this new program requires an Environmental Impact Statement and will likely take 2 years to implement.

• Hard White Wheat Development Program: This program is to promote the establishment of hard white wheat as a viable market class of wheat in the U.S. by encouraging production of at least 240 million bushels of HWW by 2012. Eligible producers will receive $.20 per bushel and $2.00 per acre for planting eligible HWW seed. Needs federal appropriations ($35 million for 2009 through 2012).

• The Market Access Program (MAP) and the Foreign Market Development (FMD) program were maintained at 2002 Farm Bill funding levels.

• Non-farmers with AGIs over $500,000 will not qualify for farm program payments, and farmers with AGIs over $750,000 will not qualify for direct payments. Those with AGIs over $1 million without 2/3 of income from farm, ranch or forestry will be disqualified from conservation payments.