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Projected 2019 crop ARC/PLC payments

By Staff | Aug 19, 2020

In October, most of Iowa’s farmers will be receiving 2019 Price Loss Coverage (PLC) program payments on their corn base acres. Also, in a few counties Agricultural Risk Coverage (ARC) County (ARC-CO) payments were triggered. However, PLC payments on soybean base acres are not expected.

Statewide, it is estimated that about $250 million total will be paid out for both ARC-CO and PLC programs. These payments are for the 2019 crop and can only be projected at this time. That’s because the final national average cash price for the 2019-20 crop marketing year will not be determined until late September. Then payments can be finalized and paid by local USDA Farm Service Agency (FSA) offices.

About 80% of eligible corn base acres nationwide were enrolled in the Price Loss Coverage (PLC) program. This same amount, about 80% of the eligible soybean base acres were enrolled the ARC-CO program. Those final enrollment percentages for Iowa have not yet been determined and will include a few thousand farms that elected the ARC Individual (ARC-IC) program by farm and by crop.

The 2018 Farm Bill introduced multiple changes to the formulas used in the calculation of the ARC/PLC program. This included eliminating the restriction that producers had to elect one program for the 5-year life of the farm bill. However, for the 2019 and 2020 crops, farmers were required to make a 2-year election by farm, crop and base acres. Starting with the 2021 crop year, farmers can make this election annually on or before March 15 and then enroll.

A PLC payment is triggered when the final national cash price for the marketing year falls below the $3.70 per bushel for corn and $8.40 per bushel for soybeans deemed the effective reference prices. As of July 10, 2020, the projected national average cash prices average for the 2019-20 marketing-year are $3.60 and $8.55, respectively. The PLC payments will likely be triggered for the 2019 crop for corn, but not for soybeans. That payment will be roughly $.10 per bushel times 85% of the corn base acres times the old PLC yield on the farm.

A typical 2019 PLC payment for corn will be roughly $12 per corn base acre, depending on the old PLC yield on that farm. Farmers can update to a new PLC yield on a farm prior to September 30 and that yield can be used beginning for the 2020 crop.

ARC-CO payments are calculated by comparing the 2019 projected county crop revenues against the ARC-CO benchmark revenues. The 2019 crop projected county revenues are obtained as the product of the 2019 final county yields from the USDA Risk Management Agency (RMA). The projected 2019-20 marketing year national average cash prices are from the July 10, 2020, USDA WASDE report. Benchmark revenues are calculated using the 2013-14 through 2017-18 trend-adjusted county yields from RMA and the marketing-year national average cash prices from the USDA FSA.

ISU Extension economists project the ARC-CO payments to range from $0 to $65 per corn base acre and from $0 to $49 per soybean base acre in Iowa on non-irrigated farms (Figures 1 and 2). The estimated payments assume a 6.8% sequestration. These final payments will be known in late September and paid out in October.

Projections are that thirteen counties will receive ARC-CO payments for both corn and soybean base acres, 4 counties will receive payments for corn base acres only, and 44 counties will receive payments for soybean base acres only. These counties had lower 2019 final county yields that were released in late June 2020 by the USDA RMA.

Another change introduced in the 2018 Farm Bill was to differentiate between irrigated and non-irrigated acres on a farm. Twenty-four counties in Iowa have irrigated corn or soybean base acres approved for the ARC-CO program. For irrigated farms, the projected 2019 ARC-CO payments range from $0 to $66 per corn base acre, and from $0 to $52 per soybean base acre, after sequestration. Four counties will receive ARC-CO payments for irrigated soybean and corn acres, 4 counties will receive payments only for irrigated corn acres, and 5 counties will receive payments for only irrigated soybean base acres.

To determine the projected 2019 ARC/PLC payments for your county by crop and irrigated versus non-irrigated practice, please use the ISU ARC-CO/PLC Payment Estimator: www.card.iastate.edu/tools/farm-bill/arc-plc/.

Steve Johnson is an ISU Extension farm management specialist. Email sdjohns@iastate.edu.

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