September 25, 2002

Program to Evaluate Decoupled Farm Payment Options is Available from NDSU

North Dakota State University agricultural economists have developed a computer program to help producers evaluate base and yield options for determining decoupled payments under the new farm bill.

Sign up for the direct and counter-cyclical payment programs of the Farm Security and Rural Investment Act of 2002, begins Oct 1. and continues to April 1, 2003. "There is plenty of time to evaluate which base and yield option is best," notes Andy Swenson, farm management specialist with the NDSU Extension Service. "The incentive to sign up early is to get the direct payment (less the Production Flexibility Contract payment already received) sooner."

The NDSU software is an electronic spreadsheet that can be operated with Excel 97 or later versions. It will also work with later versions of Lotus 1-2-3 and Quattro Pro. The software, an input form and instructions are available on the Web at http://www.ag.ndsu.nodak.edu/aginfo/farmmgmt/farmmgmt.htm. NDSU county extension agents have had training with the software. Producers and landowners with questions about the software or without computer access can contact their local county extension office for assistance.

Under the 2002 Farm bill, direct and counter-cyclical payments are decoupled from current production and are paid based on historic base acres and program yields. "Crops do not have to be planted to receive these payments," Swenson emphasizes. Direct Payment rates are fixed over the life of the Farm Bill, 2002-2007 and do not decline each year. However, counter-cyclical payments may vary over time because a component in their calculation is the national average marketing year price.

"This farm bill offers a one-time opportunity for landowners to adjust their acreage bases and yields which will be used to determine decoupled farm program payments until at least 2007," notes NDSU Extension Service farm management specialist Dwight Aakre. "Because of the impact on profitability and land values, this is possibly the most important management decision land owners will make this winter. Consequently, although the legislation is surrounded by a good deal of complexity and confusion, it’s important to evaluate all the options carefully and correctly."

The 2002 Farm Bill allows producers to update their base acres for both direct and counter-cyclical payments. If base acres are updated, producers may also update yields for counter-cyclical payments. Soybeans and minor oilseeds were added to the program as covered commodities eligible for decoupled payments. "If producers choose not to update their base acres, ‘eligible’ oilseed history can be added to the existing crop base, and oilseed yield history from 1998 to 2001 is adjusted back to 1981-1985 to be consistent with payment yields of other covered commodities," Swenson explains.

The software will evaluate the five options that Farm Service Agency will be providing at signup.

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Source: Andrew Swenson, (701) 231-7379, aswenson@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu