| This is going to be simple..
Currently LDP's are triggered and in effect for wheat. When a Wheat LDP is paid.. that $$$ amount of authority is automatically triggered for the following crop year's paid volunteer set aside.
For Instance.. current LDP's are running about $.35 here for Wheat.. say across the whole country producers LDP about.. a third of the crop at $.30 or the government pays out... ( http://www.usda.gov/oce/commodity/wasde/latest.pdf )
2,310,000,000 bu crop x .33 ldp'd (assumption) x $.30 (assumption) = $231 million in authority
Thus for the 2017 crop year producers in that county can bid up to 20% of their base acres for a paid set aside..
Say I offer 7.33% of my base at $100 7.33% of my base at $125 and 7.33% of my base (the limit) at $150
the FSA accepts the best bids up until it reaches it's authority..
My first two bids are accepted.. and I then must plant 14.66% of my base acres to a cover crop.. Say I have a 1,000 acre base thus on 73.33 acres I receive $7,330 and on the next acceptance I receive $9,162.50 to pay for the expenses of planting and maintaining an approved cover crop... or similar approved practice.
Viola..
the government likes it as it auto corrects the problems that caused the LDP's for the area's that triggered them EFFICIENTLY on a bid for it basis.. it SAVES $$$
The producer likes it as he's getting paid on market rates
It keeps the market guessing and bidding for production.
Of the $231 myn of triggered authority.. the gov't buys.. $231 myn / $112.5 (assumption) = 2.053 myn acres of set aside wheat base. at an average yield of.. there would probably be some slippage vs National Average say 48 bushels somewhere around 100 myn bushels of wheat will effectively be set aside on the following crop.
and it works. The following year.. LDP's are reduced and the thing auto corrects.. IF the county does not use all of it's authority another county in the state can request it or it can be carried over to future crop years until it is exhausted.
Ditto all the rest of the crops.
In the words of the President elect.. "It's a beautiful thing."
Edited by JonSCKs 12/5/2016 06:58
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