Few Farms Participate in the Vegetable Planting Pilot Program

The 2008 Farm Act's Planting Transferability Pilot Program (PTPP) allows program crop producers who participate in Federal commodity programs in seven Upper Midwestern States to plant selected vegetables destined for processing without violating Government payment contracts. Under the traditional rules of commodity programs, planting fruit and vegetables on base acres (acres planted to program crops) is restricted. Program rules did allow farmers to expand fruit and vegetable acreage on nonbase acres without forgoing Direct and Countercyclical Payments (DCP) or Average Crop Revenue Election (ACRE) payments.

The PTPP permits the planting of certain vegetables for processing on base acres in Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio, and Wisconsin, regardless of previous fruit and vegetable planting history. The pilot program places farms with no history on the same footing as those with a planting history--program payments are reduced acre-for-acre for each vegetable acre planted.

Program participation, however, has been low, with a total of 155 farms participating. Illinois, Indiana, and Minnesota accounted for approximately 85 percent of the farms and acres. Using farm-level data from USDA's Farm Service Agency, ERS researchers estimated that 10,000 acres were planted under PTPP in 2009--about 14 percent of the total allowable acres by statute and 2 percent of total processing vegetable acreage in the seven States. About 50 percent of PTPP acres were planted to sweet corn and green peas, which represents just 1 percent of U.S acreage for these processing vegetables. Farms with no history of planting fruit and vegetables made up the bulk of those participating in the PTPP.

The PTPP was authorized in response to claims by Midwestern vegetable processors that the traditional farm program planting rules constrained availability of raw vegetables for processing. The PTPP allows growers to plant cucumbers, green peas, lima beans, pumpkins, snap beans, sweet corn, and tomatoes. Eligible PTPP acreage is capped at various levels across States but cannot exceed a total of 75,000 acres.

One reason for the relatively low PTPP participation is stagnant or declining longrun demand for processing vegetables. Net returns to other crops are often more attractive to growers. Moreover, should market conditions become more favorable, additional demand can largely be met by planting on nonbase acres and base acres on farms with a prior vegetable planting history.

Planting Transferability Pilot Program (PTPP) expanded planting options
Commodity program history With fruit and vegetable history Without fruit and vegetable history
Before PTPP
Planting on nonbase acres1 No loss of payment NA
After PTPP
Planting on base acres Acre-for-acre payment loss Minimum of acre-for-acre payment loss plus market value of vegetables; or entire DCP2
Planting on nonbase acres No loss of payment NA
Reduced base acres Acre-for-acre payment loss NA
1Base acres are defined as the amount of a farm's acreage eligible for commodity program payments.
2DCP = Direct and Countercyclical Payment.
NA = Not applicable.
Source: USDA, Economic Research Service.