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2014 Farm Bill

2014 Farm Bill: Bases

National Center for Peanut Competitiveness

February 1, 2014

1. Potential payments for the Price Loss Coverage (PLC) and the Agriculture Risk Coverage (ARC) programs are paid on the farm’s bases associated with a covered commodity.

 2. Covered commodities are wheat, oats, and barley (including wheat, oats, and barley used for haying and grazing), corn, grain sorghum, long grain rice, medium grain rice, pulse crops, soybeans, other oilseeds, and peanuts.

3. Cotton is not a covered commodity in the 2014 Farm Bill. Cotton has the STAX program and not part of the PLC or ARC programs.

4. All bases (i.e., all covered commodity’s base and cotton base) on a farm as of September 30, 2013 stay in effect under the 2014 Farm Bill.

5. Base holders can either retain the current farm base or take a 1-time reallocation of covered commodities’ base acres.

6. If taking the 1-time reallocation, the 4 year average of 2009-2012 crop years’ planted acreage will be used.

7. However, a farm’s reallocated base cannot exceed the farm’s base on record as of September 30, 2013.

8. Cotton base is being renamed “generic” base and stays permanent during the life of the farm bill.

9. Cotton base (i.e., generic base) cannot be used in the 1-time reallocation of covered commodities’ base acres nor can it be updated.

10. Generic base can be used on a per crop year for a covered commodity whose planted acres exceed its base acres. This can be used as a temporary base. After the crop season, the temporary covered commodity base goes away. Thus, the generic base (i.e., cotton base) does not change. The following crop season the process is repeated.

11. For a given crop year, the farmer’s covered commodity (e.g., peanuts) base will be the sum of the current base assigned to that covered commodity plus any generic base that is temporarily assigned to that covered commodity.

12. Payment acres for price loss coverage (PLC) or agricultural risk coverage (ARC) with the county option will be 85% of the base acres for that covered commodity.

13. Payment acres for agricultural risk coverage (ARC) with the individual option will be 65% of the base acres for that covered commodity.

Example: 200 acres of cropland on the farm

1. 100 acres of cotton base; 50 acres of peanut base; 25 acres of corn base and 10 acres of wheat base: The farm has 185 total base acres out of 200 cropland acres – as of September 30, 2013.

2. On day 1 of the 2014 Farm Bill, the 100 acres of cotton base is reclassified as 100 acres of generic base. All of the other commodity bases stay the same. On this farm, it has 100 generic base acres and 85 covered commodity crop base acres which are the sum of the peanut base, corn base and wheat base.

3. If the farmer decides to do the 1-time reallocation, only the 85 covered commodity crop base acres can be reallocated but no increase above the 85 base acres is allowed. Furthermore, the 100 generic base acres (previously identified as cotton base) cannot be updated nor permanently reallocated.

4. The farmer could opt not to reallocate and just retain current farm base. We assume that the farmer just retained the farm’s current base for the rest of this example.

5. In 2014, farmer plants 70 acres of peanuts, 20 acres of corn, 20 acres of grain sorghum, 20 acres of wheat and 70 acres of cotton: all 200 acres are planted to either cotton or one of the covered commodities.

6. The farmer’s total planted acres of the covered commodities for 2014 is 130 acres, which is more than those planted commodities’ total base of 85 base acres on that farm.

7. Since the farm has only 85 covered commodity base acres allocated to the farm but has planted 130 acres, the farmer can use the 100 generic base acres assigned to the farm and temporarily allocate those base acres to their planted covered commodity acreages that exceed that commodity’s base. With 70 peanut planted acres and only 50 base acres requires 20 acres of temporarily assigned generic base to peanuts; With 20 grain sorghum planted acres and 0 base acres requires 20 acres of temporarily assigned generic base to grain sorghum; With 20 wheat planted acres and only 10 base acres requires 10 acres of temporarily assigned generic base to wheat. In this farm example, the farmer used 50 of their 100 generic base acres in temporarily assigning to one of the covered commodities that had planted acreage above their base. The sum of the temporarily assigned generic bases cannot exceed the total  generic base assigned to that farm.

8. Thus, for the 2014 crop year, the farmer has 70 acres of peanut base, 25 acres of corn base, 20 acres of grain sorghum base and 20 acres of wheat base.

9. Generic base acres can only be temporarily assigned to a covered commodity that was planted above its base for that year.

10. Even though the farmer planted only 20 acres of corn, any potential payments will be paid on a portion of the corn’s 25 base acres (i.e., payment acres).

11. This process is repeated each crop year.

Source: The Agricultural Act of 2014 (H.R. 2642). View H.R. 2642.