Possible ARC-CO Recalculations
As discussed in our webinars on the farm bill last year and earlier this year, farmers who signed up for ARC-CO (County) would have payments made based upon what county the FSA administered your farm not the county where the farm was located (if different). This could result in differences between payment amounts and the differences could be substantial.
For example, assume a farmer has farms in both Walla Walla and Columbia County, Washington state. The farmer has elected to have all of his farms administered in Columbia County. The FSA issued checks to the farmer based on all acres being located in Columbia County. Let’s assume the ARC-CO wheat payment for Columbia County is $40 and the payment for Walla Walla County is $50. The farmer had 2,000 base acres located in Walla Walla. Since all of his payment is based upon Columbia County, he will have $17,000 less in ARC-CO payments than if the payments were made based on the actual county (2,000 X 85% X $10).
Due to these differences not being totally communicated by the FSA to farmers for the 2014 and 2015 crop signup, the FSA has agreed to allow a one time recalculation for farmers to be based upon where the farm is actually located versus administered. This option was just reported by Marcia Taylor and Chris Clayton at DTN-Progressive Farmer.
Here is the listing of the key items regarding the recalculating option:
- You can elect to recalculate your ARC-CO payments for crop year 2014 and/or 2015. You can elect for one year and leave the next year as is or elect for both. If you make no election, the payment you just received is what you will end up with.
- The election is for all covered crops on your farm. The actual payment will be made based upon the net difference.
- All producers on the farm are required to sign off on the recalculation. This may result in some shareholders having to return payments already received.
- You have until February 1, 2016 to make the election.
- 2016-2018 crop elections are not affected. If you want to reconstitute your farms for those crop years, you will need to follow the normal procedures with the FSA.
The FSA has provided a listing of all payments for all crops by county issued so far. If you need some help on this, please send an email to me at paul.neiffer@claconnect.com and I can help you decide especially if you are not sure about what to do for the 2015 crop year election since MYA prices and yields are not known yet.
Paul Neiffer, CPA
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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