An Evaluation of Alternatives for Updating Base Acres in the 2024 Farm Bill

Abstract

Given that the income-support provisions in the farm bill have been decoupled from production for more than two decades, base acres are no longer reflective of planted acres in the United States. Three alternatives are currently being discussed to better align base acres with current plantings in the next farm bill: 1) a reallocation of bases to current plantings, 2) a forced update to current plantings, and 3) a rolling average of the plantings from the previous two years. There undoubtedly will be winners and losers across individual operations, crops, and regions. Knowing who will be impacted would enable Congress to make more informed decisions regarding base updates. To comprehensively evaluate the alternatives, this study undertook a farm-level and national analysis. The farm-level analysis was implemented by collecting data from four representative farms maintained by the Agricultural and Food Policy Center at Texas A&M University. For each farm, base acres were calculated for the three alternatives, and stochastic simulation was used to determine a five-year forecast of average government payments, ending cash, and ending real net worth. The national analysis was conducted by collecting public data from the Department of Agriculture���s Farm Service Agency for nine covered commodities and calculating new base acres per county to determine absolute gains and losses. The absolute change per crop per county was totaled to determine the deviations between the current baseline and each scenario being analyzed. The results from the farm-level and national analysis indicate a wide variety of impacts on individual farms, crops, and regions. While maintaining current base acres might be the optimal solution for one location or commodity, it is apparent that the same scenario would be less preferred by others. One universal option (e.g., to reallocate base acres) might not be the best solution; in fact, allowing producers to choose amongst several options might be the best route for baseline modification in the next farm bill, recognizing that approach will also cost the most