ARC-CO Yield Guarantees Increase Across Much of the Country

by Brent Gloy

Direct farm program payments have again become a critical component of net farm income.  In 2016 direct farm program payments are forecast to account for $13 billion of the sector’s $68 billion (19%) of net farm income.  At $5.9 billion the ARC-CO program is by far the largest category of direct farm program payments.

As we have discussed before, the price guarantees of the ARC-CO program have already begun to decline and this decline will likely accelerate for the 2017 crop year.  However, ARC-CO is a revenue based program, so guarantees are also dependent upon county level yield histories.  Given that the U.S. has harvested three very large corn and soybean crops in a row, we thought it would be interesting to see how the county level yields have changed over the course of the program.  Continue reading

How Did Your County Do? Changes in ARC-CO Revenue Guarantees

By Brent Gloy

ARC-CO Revenue

In our last post we discussed how the Olympic averaging process will almost certainly result in lower price guarantees for corn and soybeans in 2016.  In this post we take a look at the county level yield and revenue guarantees. Continue reading

Approaching the ARC-CO Payment Cliff?

ARC-CO Payment Cliff

by Brent Gloy

At the end of October the USDA provided a Halloween treat by making ARC-CO payments for several 2014 crops. In fact, USDA reported that 800,000 farms received ARC-CO payments.  The 2014 ARC-CO payments totaled $3.9 billion with the vast majority ($3.3 billion) paid on corn base. This wasn’t surprising as the ARC-CO program was very popular with corn and soybean farmers, with over 90% of farms and base acres enrolled in the program.

As we discussed in an earlier post, government support has played a key role in moderating the impact of farm income downturns. However, the payments provided under this farm bill will almost certainly be less than that in previous periods of low income. Further, given the structure of the ARC-CO program it is quite likely that program payments for corn will begin to fall after the 2015 payments. Continue reading