New Method of Calculating Soybean
Base Acres: Changes to the 2002 Farm Bill Decision Tool (version
During the first week of October 2002, the Farm Service Agency
introduced a new method of calculating soybean base acres under
the 2002 Farm Bill. This method will impact base soybean acres under
option 2 (i.e., retain 2002 Production Flexibility Contract (PFC)
acres and add minimum eligible oilseed acres). The change in method
also potentially impacts total program acres under option 3 (Exchange
2002 PFC acres for maximum oilseed acres) and option 5 (Exchange
existing 2002 PFC acres with less than minimum or maximum oilseed
acres). The change will not impact acres under option 1 (Retain
2002 PFC acres) or option 4 (Update acres). More detail on these
options can be found here.
The change in method results in the same or higher soybean base
acres. It also results in the same or higher total base acres. The
net impact of the change is to increase potential payments under
options 2, 3, and 5.
Because of these changes, we have revised the 2002 Farm Bill
Decision Tool and introduced version
5.0. The change in base acre calculations is shown in the following
Example of Change in Soybean Base Acres
The change in the soybean base acres method is described for option
2. Under option 2, "old" program crop including corn,
wheat, oats, and grain sorghum have the same base acres as under
the 1996 Farm Bill, and the minimum number of soybean acres are
added. Under the old method, the minimum soybean base acres are
determined by first calculating eligible soybean acres for each
year. A year's eligible soybean acres equals the minimum of:
- Total program acres planted during the year minus PFC bases
for old program corps (if the result is greater than zero, zero
- Planted or prevented planted soybean acres during that year.
Then, eligible soybean acres are averaged to arrive at the minimum
soybean base. Under the new method, soybean base acres equals the
minimum of 1) total program acres minus current PFC acres averaged
for 1998 through 2001 minus (negative numbers are replaced by zero),
or 2) average soybean acres from 1998 through 2001. If the minimum
is below zero, a zero soybean base is used.
The two methods are illustrated for an example farm that plants
100 acres of program crops each year (see Table 1) and has 60 PFC
corn acres. The farm has two fields, one of 70 acres and one of
30 acres, that are rotated between corn and soybeans. The 70 acre
field has corn and the 30 acre field has soybeans in 1998, the 70
acre field has soybeans and the 30 acre field has corn in 1999,
and so on.
Under the old method, the maximum number of eligible acres for
soybeans in each year is 40 acres (100 program acres - 60 PFC corn
acres). In 1998 and 2000, planted soybean acres of 30 are below
the maximum of 40; therefore, eligible soybean acres in these years
are 30. Eligible soybean acres equals the average of 40 (eligible
acres in 1998), 30 (eligible acres in 1999), 40 (eligible acres
in 2000), and 30 (eligible acres in 2001). This average is 35. Under
the old method, this farm would have had 60 acres of corn and 35
acres of soybeans.
The old method may result in lower total base acres than average
plantings from 1998 through 2001. Under the old method, the example
farm has a total of 95 base acres in both corn and soybeans, 5 acres
below planted acres. This reduction occurs because acres eligible
for soybeans are determined in each year rather than determining
eligible acres based on four-year average planted and prevented
plantings. The more extreme the differences in soybean planting
per year, the greater the reduction in base acres from planted acres.
In the above example, planting 100 acres of soybean in one year
and 0 in the next results in 20 base soybean acres, 15 acres less
than in the example in Table 1.
Under the new method, total program acres from 1998 through 2001
minus current PFC acres equal 40 acres (100 program acres - 60 program
acres). This is less than the average soybean plantings of 50 acres
from 1998 through 2001. Hence, the soybean base under this method
equals 40 acres. Under this method, the farm has 60 acres of corn
and 40 acres of soybeans. Rotation across years does not influence
the final minimum soybean base acres.
This change in soybean acre method may result in higher soybean
base acres under option 2. It will also result in higher total program
acres under options 3 and 5. This change makes options 2, 3, and
5 more favorable compared to options 1 and 4.
Many farmers have used version 4 of the 2002 Farm Bill Decision
Tool to project direct and counter-cyclical payments for the
five options. It is advisable to re-run these calculations using
version 5.0. The change in method will have the largest impact on
farms that have rotations where 100 percent of corn is raised in
one year and 100 percent in the next. Farms that have 50 percent
of their farmland in corn and the other 50 percent in soybeans will
not have acreage changes as a result of this new calculation method.
Prepared by: Gary Schnitkey, Department of Agriculture
and Consumer Economics, University of Illinois, October 2002.