kent thiesse

The U.S. Department of Agriculture’s Farm Service Agency has announced the final 2018 Ag Risk Coverage (ARC-CO) payment levels for corn, soybeans, wheat and other program crops. Some farm operators in the upper Midwest are receiving 2018 farm program payments from FSA on certain program crops during October. Most crop producers in Minnesota and surrounding states were still enrolled in the county yield-based Ag Risk Coverage farm program choice on their corn and soybean base acres for the 2018 crop year. ARC-CO is based on both crop yields and prices. The Price Loss Coverage farm program option is a “price-only” program that is based on national crop prices, which may become more popular for the 2019 and 2020 crop years.

The market year average price for a given crop year is used to calculate any potential payments for the PLC and ARC-CO programs. The historical market year average prices are also used to determine the benchmark revenuesfor the ARC-CO program option. The market year average price for a given commodity is not based on the Chicago Board of Trade commodity prices, or any specific local or terminal grain prices. The market year average price is the 12-month national average price for a commodity, based on the average market price received at the first point of sale by farm operators across the United States. The USDA National Agricultural Statistics Service collects grain sales data on a monthly basis, which is then weighted at the end of the year, based on the volume of bushels sold in each month.

The 12-month marketing year for corn and soybeans begins on Sept. 1 in the year that a crop is harvested, continuing through Aug. 31 the following year, with market year average price being finalized on Sept. 30. For the 2018 crop year, the 12-month marketing period to determine the final market year average price was from Sept. 1, 2018 through Aug. 31, 2019, with the market year average price being finalized on Sept. 30, 2019.

The market year average marketing period for wheat and other small grain crops is from June 1 in the year of harvest to May 31 the following year. The final 2018-19 market year average prices which were used for 2018 farm program payment calculations were $3.61 per bushel for corn, $8.48 per bushel for soybeans, and $5.16 per bushel for wheat.

PLC payments are being made on any crops that had a final 2018-19 market year average price lower than the established reference price for that crop. Corn had a final market year average price of $3.61 per bushel, compared to a reference price of $3.70 per bushel, resulting in a PLC payment rate of $.09 per bushel. Wheat had a final market year average price of $4.72 per bushel, compared to a reference price of $5.50 per bushel, resulting in a 2018 PLC payment of $.34 per bushel. So, any producers enrolled in the PLC program for corn or wheat for 2018 will receive a PLC payment.

There were no 2018 PLC payments for soybeans, due to the final 2018-19 soybean market year average price being $8.48 per bushel, compared to a reference price of $8.40 per bushel. PLC payments are made on 85 percent of FSA crop base acres for a crop times the established FSA yield on a particular farm unit. In most upper Midwest states, less than 10 percent of the corn and soybean producers are enrolled in the PLC program. Approximately half of the wheat producers in the United States are in the PLC program.

Only six counties in south central Minnesota, which had significantly reduced corn yields in 2018 due to excessive rainfall amounts, are receiving a 2018 ARC-CO payment for corn. These counties are Brown, Faribault, Jackson, Martin, Redwood and Watonwan. Some counties north central Iowa, as well as in the western half of North and South Dakota, will also receive 2018 corn ARC-CO payments, due to yield reductions in 2018. A much larger number of counties in the upper Midwest and Plains states are scheduled to receive 2018 ARC-CO payments for wheat. 

There are only five counties in Minnesota scheduled to qualify for 2018 ARC-CO payments for soybeans, including Faribault, Jackson, Martin and Watonwan counties in south central Minnesota; as well as Kittson County in northwest Minnesota. A much higher number of counties in Iowa, North Dakota and South Dakota will receive soybean ARC-CO payments for 2018. Due to the decline in the 2018-2019 soybean market year average price to $8.48 per bushel (which was well below the $9.63 benchmark price), a final 2018 county yield that was only a couple bushels below the 2018 county benchmark yield resulted in the initiation of 2018 ARC-CO payments for soybeans.

Producers should be aware that the quoted ARC-CO and PLC payment rates per acre for corn, soybeans and other crops on the FSA website are on a gross payment per acre basis. These gross ARC-CO and PLC payments need to be factored by 85 percent in order to arrive at an ARC-CO payment rate per crop base acre. The 2018 ARC-CO and PLC payments are also subject to the required Federal sequestration reduction of 6.8 percent, which will affect the final total payment received by farm operators.

Resources

Kent Thiesse has developed an information sheet titled “Final 2018 Corn and Soybean ARC-CO Payments”,which looks at the final 2018-19 market year average prices and ARC-CO payments for corn and soybeans, as well as a look ahead to 2019 ARC-CO payments. To receive a copy of this information sheet send an e-mail to kent.thiesse@minnstarbank.com

The USDA FSA ARC/PLC web site contains 2014-2018 ARC-CO payment rates, as well as a variety of other farm program data and information for all crops. The web site can be found at www.fsa.usda.gov/programs-and-services/arcplc_program/

Kansas State University also has some very good interactive maps for 2018 ARC-CO payments, as well as historical ARC-CO payment data,  available on their “Farm Manager” web site at www.agmanager.info/ag-policy/arc-co-historical-payment-maps