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

Planning on a Big ARC-County Payment? Better Wait for the County Yields

By Brent Gloy

It’s that time of year when farmers are putting together their crop budgets and operating credit requests for the next crop year. One big unknown for many farmers relates to the size of potential government program payments. Earlier it appeared as if the new ARC-County farm program was set to make some substantial payments to farmers, but farmers and bankers may want to be very conservative about the size of government payments that they place in their budgets. Although crop prices are well below the 5 year Olympic average for both corn and soybeans, it is quite likely that crop yields for many counties will be high this year. How high these yields are set will greatly influence ARC-County payments.

Many farm bill sessions that I have either attended or read about have focused on how the market year average (MYA) price will impact the size of farm program payments for the ARC and PLC program options. When it comes to payments under ARC-County, the level of county yields will also be critical in determining the payments, so we decided that it would be useful to provide some information on how county yields might influence the ARC-County payments. Continue reading