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

Fertilizer Leads Variable Expenses Lower

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by David A. Widmar

A few weeks ago we evaluated fixed expenses to see if adjustments lower had occurred. Changes have been slow, but have started to emerge. Another second component of production costs are variable expenses. These are the expenses producers typically monitor very closely; fuel, fertilizer, and seed. This week we take a look at the USDA’s cost of production data and the Purdue crop budgets to evaluate where source of lower variable expense have occurred. Continue reading

Are Lower Fertilizer Prices in the Cards for 2016?

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by David A. Widmar

A few weeks ago we looked at price expectations for corn and soybean in 2016. Based on the Purdue Crop Budgets, even lower corn and soybean prices are forecasted for 2016; this is especially true for soybeans. With little chance of commodity prices improving in the foreseeable future, production cost reductions will be critical in 2016. Fertilizer is the largest corn input expense (excluding land). This week we take a look to see if lower fertilizer prices can be expected in 2016. Continue reading