ARC/PLC decision deadlines loom
Iowa producers on row crop farms have until March 15 to make a 2-year election and then enroll by commodity crop and Farm Service Agency (FSA) farm number. There really is no reason to delay, as no ARC/PLC payments are expected for the 2019 crops. Besides, many FSA offices could be swamped by mid-February.
Producers should start by understanding the importance of the effective reference prices of $3.70 per bushel for corn and $8.40 per bushel for soybeans. In order to trigger a PLC payment, the final national cash for the entire marketing year must below these levels. The national cash price projections for the 2019 crop as of January 10, 2020 is $3.85 per bushel for corn and $9.00 per bushel for soybeans, respectively. Thus, no PLC payments are expected for corn and/or soybean base acres that were elected and enrolled in the PLC program.
If there are 2019 ARC or PLC payments, it will likely be in a county with exceptionally low 2019 final yields. These final county yield numbers from the USDA Risk Management Agency (RMA) will not be known until June 2020. The 2019 Iowa yields from the National Ag Statistics Service (NASS) January report were estimated to be 198 bushels per acre corn and 55 bushels per acre for soybeans. Such levels indicate that most final county yields are likely too high to trigger a 2019 ARC-CO payment.
If there is a 2019 ARC/PLC payment, it will likely be for the ARC-Individual (ARC-IC) program. The producer probably has a farm with poor 2019 yields and possibly prevented planting acres. That producer should consider electing and enrolling all crops by FSA farm number in the ARC-Individual (ARC-IC) program if a likely payment will be generated. It will require further examination and production evidence for each commodity crop produced on that farm since the 2013 crop year.
It’s actually for 2020, that an ARC/PLC payment seems more likely. Corn and soybean planted acres are expected to increase by roughly 11 to 12 million total planted acres for both crops as a result of the large prevented planting acres in 2019. Two sources of 2020 price projections released last fall are the USDA Outlook and the Food Agricultural Policy Research Institute (FAPRI) at the University of Missouri.. Both sources project an increase in 2020 U.S. corn planted acres by 2.5 to 4.5 million acres and use 30-year trendline yields assuming normal production. Those 2020 crop cash price projections for corn are $3.40 and $3.53 per bushel, respectively. Thus, the likelihood of a 2020 PLC payment for corn that would be received in October 2021 as the final cash price would fall below the reference price of $3.70 per bushel.
Using those same two sources for 2020 soybean cash price projections, U.S. soybean planted acres would increase between 7.5 and 8.5 million acres as compared to 2019. Again, they use 30-year trendline yields and normal production. Those 2020 crop cash price projections for soybeans are $8.54 and $8.85 per bushel, respectively. Thus, no 2020 PLC payment for soybean base acres is expected as the final cash price is not below the effective reference price of $8.40 per bushel. However, the lower national cash price improves the chances of ARC-CO payments for soybean base acres depending on the final county yields.
Producers will also have a one-time chance to update their PLC Farm Yields starting with the 2020 crop. Even if a producer elects the ARC-CO or ARC-IC program option, the PLC yield can be updated and becomes the public record of the farm’s yield. Supporting evidence for the PLC Yield Update will likely come from a producer’s crop insurance records if a program crop was produced in the 2013 thru 2017 crop years. In some cases, the yields for a crop insurance unit might not match with the FSA farm number and will need to be averaged. Note the farmland owner on cash rent farms will need to approve this PLC Yield Update and sign the form CCC-867 unless a power of attorney form is on file.
Use the ISU AgDecision Maker ARC/PLC Payment Estimator and PLC Yield Update Tools to provide your analysis.
Steve Johnson is an Iowa State University Extension and Outreach farm management specialist. He can be reached at email@example.com.
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