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Possible Maximum ARC-CO and PLC 2014 Payments

Published on: 23:50PM Jan 25, 2015

The University of Illinois in their FarmDoc Daily report released estimated ARC and PLC payments by state last week. For corn, the payments ranged from a low of zero for ARC-CO in multiple states (those with higher than average yields in 2014). Some of the key corn-growing states with estimated ARC-CO payments of zero were Kansas and Missouri. Each state is showing an small estimated PLC payment based on the latest projection from USDA of MYA of $3.65. This is up from $3.50 for the previous month. The maximum payment states are Washington, Oregon and Idaho, all in the Pacific Northwest. Each of these states will get more than $80 per acre with Washington topping out at almost $100 per acre.These states are almost all irrigated corn states and for example, the county I live in (Benton County, Washington state) tends to have the highest corn averages each year. The average for 2012 was 282 bushels per acre. Thus, this leads to the higher corn payments this year since yield was not higher than the Olympic average.

Only 7 states are expected to have a Soybean ARC-CO payment with New York in the lead at a whopping $20 per acre. No state will get a PLC payment since the expected MYA price of $10.20 is almost $2 higher than the $8.40 reference price.

Since the wheat expected MYA price is about 60 cents higher than the reference price, there will be no wheat PLC payments for this year, however, states with lower yields led by Washington state at $37 per acre will get an ARC-CO payment. These states had lower yields due to drought in 2014 versus very good yields in the previous 5 years.

These estimates are based upon state averages. I thought I would examine the county averages for the higher payment states and see if I could come up with an estimate of the highest ARC-CO payments for these three crops this year.

For corn, that would be based upon Benton County, Washington. The Olympic average yield for Benton County is 256 bushels per acre. When we times this by the Olympic average price of $5.29 we come up with $1,354 of benchmark revenue. Thus the maximum ARC-CO payment for Benton County, Washington for the 2014 crop year will be $135.40 (10% of $1,354).

For soybeans, it appears that Seneca County, New York has the highest Olympic average yield at 49 bushels per acre. We then multiply this by $12.27 Olympic average price to arrive at benchmark revenue of $601.23, thus resulting in a possible maximum payment of $60.12 per acre.

For wheat, it appears that Franklin County, Washington has the highest irrigated wheat yield in Washington state at 126 bushels per acre. Multiplying this by the $6.60 Olympic average price yields total benchmark revenue of $831.60. 10% of this number is $83.16 which could be the highest wheat ARC-CO payment in the state. If it is not Franklin County, it is likely to be one of the counties located in the Willamette valley of Oregon. Many of those counties have Olympic average yields in excess of 100 bushels per acre which would result in maximum wheat ARC-CO payments of $60-$70.

However all of these are estimates and we won't know actual county yields until February when we can do a more accurate calculation. I will keep you posted.