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 Knowledge for the CommonWealth

2002-2007 Farm Bill Base and Yield Options

Farm Business Management Update, October/November 2003

By Jim Pease

On its website at USDA/Farm Services Agency has posted the summary of commodity program base and yield options selected by participating producers. Under the 2002 Farm Bill, producers selected among five options for updating their program yields and acres for the supported commodities: wheat, feed grains, upland cotton, rice, oilseeds, or peanuts. The options were:

Option Base acres Program yields
1 No update, no inclusion of oilseed acres Remain at 2002 level
2 Retain 2002 base acres + minimum 1998-2001 oilseed acres to cover eligible acres Remain at 2002 level except add adjusted 1998-2001 oilseed yields
3 Add 1998-2001 oilseed acres + minimum 2002 base acres to cover eligible acres Remain at 2002 level except add adjusted 1998-2001 oilseed yields
4 Update all base acres to 1998-2001 average For direct payments:
Remain at 2002 level
For counter-cyclical payments:
Choice of 3 update options
5 Retain 2002 base acres + 1998-2001 oilseed acres in range between option 2 and option 3 Remain at 2002 level except add adjusted 1998-2001 oilseed yields

Producers that did not select one of the above options by April 1, 2003 were assigned Option 2 as the default. The producer's selection was dependent on many farm-specific factors, including the desire to avoid payment limitations. In southeast Virginia, the choices were further complicated by the new requirement to add peanut acres to the farm program base acres.

Nationwide and in Virginia producers selected the following options:

  Eligible Farms Option 1 Option 2 Option 3 Option 4 Option 5 Default (Option 2)
Virginia 36,302 5,557
US 2,134,104 466,297

Among the 11,604 Virginia farmers who selected Option 4 (the only option allowing updated yields for counter-cyclical payment), 42% opted to update their program yields for counter-cyclical payments to 93.5% of the 1998-2001 average yield. A smaller proportion (38.9%) opted to update their counter-cyclical payment yields to 70% of the difference between 1998-2001 average yields and the 2002 program yields. These percentages are not much different than those of the entire U.S. A significant difference between Virginia and U.S. producers is seen by the proportion of farmers accepting the default option. The program base acres and yield options translate into many dollars of government payments over at least the period 2002-2007. It is to be hoped that all eligible Virginia farmers evaluated the options and chose the one that promises the highest income for their farm.

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