News

Economist: No easy answers on reallocation decision

The first step in the sign-up process for the new farm program involves updating FSA payment yields and reallocating crop base acres.

Dr. James Richardson, the author of Texas A&M’s on-line farm program calculator, says the reallocation decision is one that many producers are wrestling with.

“There’s a formula that you can reallocate your potential base, based on your current planting of crops. But the question is, what’s the economics of that,” Richardson says. “The real answer always comes down to, ‘Yes, I could reallocate my base, but is it going to be better off for me? I’m going to have more expected government payments as a result of this—but do I have a better safety net if I reallocate or not reallocate?’”

Richardson says the answers to those questions are different for every producer.

“We’ve got a lot of people that say, ‘Well, we need a rule of thumb—should I always do this or should I always do that?’ And I won’t answer,” he says.  “It depends on the farmer’s history of plantings—it depends also on their preference for income versus risk management.  It’s unique to each person.”

Landowners have until February 27 to make that decision.

Richardson, who is the co-director of the Agricultural & Food Policy Center at Texas A&M, spoke with Brownfield at a farm bill computer training session in Lincoln, Nebraska.

AUDIO: James Richardson