The Farm CPA
Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
USDA to Award $6 Million for Farm Bill Help
May 30, 2014
The USDA announced yesterday that they will be awarding $ 6 million to help farmers analyze their farm bill options primarily related to ARC and PLC. There will also be tools to analyze the options for dairy producers under the new Dairy Margin Protection Program that should start September of this year and the Noninsured Crop Disaster Assistance Program (NAP) that will being early in 2015.
The University of Illinois, Missouri and Texas A & M have been elected as the co-leads for the design and implementation of the online tools to help farmers. The bill allocated $3 million toward these tools and another $3 million will be allocated to state cooperative extension services for outreach and education on the new Farm Bill programs. Here is the amount allocated to each state.
The FSA has also produced a table of the projected 2014 effective prices and PLC payment rates for each covered crop. Here is a pdf of the table and here is an excel spreadsheet of the table. For example, corn's statutory reference price for the 2014 crop year is $3.70. The projected price is $4.20. Since $4.20 is greater than $3.70, there is no expected PLC payment. The 2014 National Loan Rate is $1.95, therefore, the maximum PLC payment is $1.75 ($3.70-$1.95). Currently, the table lists the following crops as being eligible for a PLC payment assuming USDA's projected prices are correct (estimated payment amounts are listed):
- Barley $.10 per bushel
- Peanuts $.0675 per pound
- Sunflowers $.004 per pound
- Canola $.0115 per pound
- Safflower $.0015 per pound
Assuming USDA price projections are correct, all other crops would not receive a PLC payment.
There is also a table of the projected county ARC prices for the 2014 crop years. Here is a pdf of the table and here is an excel spreadsheet of the table. The table shows the actual prices from the 2009 crop year to the 2013 crop year with a projection for each of the 2014 crops. We previously provided some estimates on what the 2014 crop prices would be for corn, soybeans and wheat and the current projected prices from the USDA are not too far off from our original estimates. We estimated corn at $4.65 and USDA is at the same number. We estimated wheat at $6.50 and USDA is at $6.85 (with the downturn in May prices, I estimate this number may be closer to $6.80) and for soybeans we were at $13.25 and USDA is at $13.10. One was spot on, one was a little high and one was a little low. Overall, not too bad of an estimate.
Once these numbers are finalized, we will know the benchmark revenue for each commodity. The key thing to look for in this table is to find your crop and see how the projected benchmark price compares to both current estimated 2014 crop prices and the statutory reference price. For example, soybeans reference price is $8.40. The projected benchmark price is $12.30. 86% of this number is $10.57. The projected price is $10.75. Although the projected price is slightly higher than the $10.57 effective benchmark price, if yield is down a little bit, soybeans would get an ARC payment, but prices would have to drop under $8.40 before any PLC payment is received.
I have bookmarked the FSA ARC/PLC Programs page and you may want to either bookmark it or at least check it out periodically for updates or keep checking our blog since we will continue to update you.