2014 ARC-CO Payments Likely

It appears highly likely that many crop producers in Minnesota and Northern Iowa that are enrolled in the county yield-based Ag Risk Coverage (ARC-CO) farm program choice on their corn base acres will earn a significant farm program payment for the 2014 crop year. In addition, farm operators in some counties may also earn an ARC-CO payment on soybean base acres for the 2014 crop year. At current estimated market year average (MYA) prices, it is not likely that producers that enrolled in the Price Loss Coverage (PLC) program will earn a farm program payment for either corn or soybeans for the 2014 crop year. All farm program payments for the 2014 crop year will be paid after October 1, 2015.

As of August 1, the current USDA estimate for the 2014 MYA price for corn is $3.70 per bushel. Based on that MYA price estimate, the projected 2014 ARC-CO payment for corn in most Minnesota and Northern Iowa counties would be at the maximum payment level. Estimated maximum ARC-CO payment rates in various counties are from $70.00 to just over $80.00 per corn base acre in Southern Minnesota and Northern Iowa, from $60.00 to $70.00 per corn base acre in Central Minnesota, and slightly less than that amount in Northern Minnesota.

As of August 1, the current USDA estimate for the 2014 MYA price for soybeans is $10.05 per bushel. Based on that MYA price estimate, the projected 2014 ARC-CO payment on soybean base acres in Minnesota and Northern Iowa would range from zero to $50.00 per soybean base acre. Approximately half of the counties would likely get either a partial or maximum payment for 2014, depending on the 2014 average county soybean yield, compared to the 5-year average county yield. As a result, producers in one county may receive a significant 2014 ARC-CO payment on their soybean base acres, while producers in the neighboring county may receive no payment.

Based on the current 2014 MYA price estimates of $3.70 per bushel for corn and $10.05 per bushel for soybeans, there would not be a 2014 PLC farm program payment for either corn or soybeans. If the final corn MYA price on September 30, 2014, drops below $3.70 per bushel, there would be a very small 2014 PLC payment on corn base acres The soybean MYA price needs to be below $8.40 per bushel before any PLC payment would occur on soybean base acres.

The “Market Year Average” (MYA) price for a given crop year is used to calculate any potential payments for the PLC, ARC-CO, and ARC-IC programs. The historical MYA prices are also used to determine the “benchmark revenues” for both the ARC-CO and ARC-IC program options. The MYA price for a given commodity is not based on the Chicago Board of Trade (CBOT) commodity prices, or any specific local or terminal grain prices. The MYA 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 (NASS) 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 September 1 in the year that a crop is harvested, and continues until August 31 the following year. For the 2014 crop year, the 12-month marketing period to determine the final MYA price was from September 1, 2014 through August 31, 2015, with the MYA price finalized on September 30, 2015.

USDA publishes monthly and season-average estimated market prices for various commodities, which are available on the FSA farm program web site. These average prices are also updated each month in the USDA Supply and Demand Report, which is usually released around the middle of each month. Some Universities also update projected MYA prices on a monthly basis for selected crops. Kansas State University offers one of the best monthly updates of MYA prices for corn, soybeans, and wheat. Website

Kent Thiesse has prepared an Information Sheet titled “Estimating 2014 Corn and Soybean ARC-CO Payments”, which looks at estimating the likelihood of 2014 ARC-CO payments for corn and soybeans at various 2014 market year average (MYA) price levels, and various County 2014 NASS yield levels, expressed as a “% of BM Yield”. The Information Sheet also includes Charts that list the 2014 benchmark (BM) yield, the 2014 NASS yield, and the % of BM Yield” for most Counties in Minnesota and Northern Iowa. This Information Sheet helps explain the difference from county-to-county for estimated 2014 ARC-CO payments on soybean base acres, and could provide some early insight on potential 2015 ARC-CO payments.

The University of Illinois FarmDoc web site has prepared 2014 ARC-CO corn and soybean payment estimates for nearly every County in the U.S., at various MYA price levels. Following are the links to that data :

Farm operators need to enroll in the ARC/PLC farm program for 2014 and 2015 at their local Farm Service Agency (FSA) office by September 30, 2015, in order to be eligible for farm program payments for those two years. Failure to enroll in the farm program by September 30 means no 2014 ARC-CO payments, which could cost producers thousands of dollars in lost farm program payments.

Note — For additional information contact Kent Thiesse, Farm Management Analyst and Vice President, MinnStar Bank, Lake Crystal, Minnesota. Phone: (507) 381-7960); Email: kent.thiesse@minnstarbank.com; Web Site: www.minnstarbank.com


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