Has Anything Changed?

Published on: 11:08AM Apr 06, 2015

Tomorrow is the last day to sign up for ARC/PLC under the new Farm Bill. We have not heard any rumblings about another extension, but if there will be one, it will likely be announced today. Grain prices have not been extremely volatile over the last few months, so it is extremely likely that nothing has really changed regarding the choices between ARC and PLC. For those counties with maximum potential ARC-CO 2014 payments, unless prices rally substantially between now and harvest, you will collect those maximum payments.

For those in counties where you will collect no payment, prices would need to collapse to potentially collect any payment (which is even more unlikely).

For those counties in between, an increase or decrease in prices will affect your final payment. For example, assume you farm in Cross County Arkansas. NASS showed a final planted yield of 172 and I have rounded this up to 175. If corn prices average about $3.60 or lower, farmers in this county will receive a maximum payment of $70.59. However, if corn prices start to rally, at $3.70, farmers only get $56.75 and it drops about $15 for each 10 cent rise in prices. At $4.10 average MYA, these farmers will get no ARC-CO payment.

An example for Soybean growers is Lyon County, Iowa. If soybean MYA averages $10, then these farmers will get a $25.35 payment. If it is 50 cents higher, they get $2.40 and if it is 50 cents lower, they get $48.30.

Wheat does not have as much variability. Most of the crop has already been sold and the wheat guarantee price is much closer to the current estimated MYA price, so in most cases, the change in price will not affect your payment. Either you will get the maximum amount or you will get nothing.

As FSA finally releases their yields, we will update the final estimated ARC-CO payments based on certain price assumptions.

On a personal note, today is April 6, which means there is only 9 days of tax season left. This year has been a little more stressful than previous years, but I can see a light at the end of the tunnel and I don't think it is a train coming at me.