Making Farm Bill Program Decisions
Fortenbery: “Well the most important thing is to not be concerned with trying to figure out which program will maximize your government payment over the next five or six years — because that is really a crap shoot trying to figure that out. It is trying to decide which bad event would hurts me the most. Which really comes down to deciding whether your biggest risk is on the price side or the yield side. Everyone will say both and that is true but unfortunately this program requires you to pick one of those over the other. A lot of yield variability — ARC will probably be a better bet. Almost no yield variability — then the PLC program would be a better. But either way — it really determines how prices play out over the life of the farm bill.”
He adds what program you select will mostly likely affect your future land prices as well.
Fortenbery: “Because the program is tied to the land then if I go to sell the land while this Farm Bill is still in operation and one of the programs is consistently paying out more than the other one then we would expect that to get capitalized into the value of the land. It is just like under the CRP ground. How much I would pay for CRP ground was partly a function of was a size of the CRP payment. So land that had a large payment had a higher market value than land that had a lower payment. So as we go forward, if one of these programs is consistently paying out and the other one isn’t I expect that will start to reflect in relative land values for land that has the same production potential but has a different program assigned to it.”