Iowa Ag Connection - Farm Bill Safety Net Pay Provides Small Cushion

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Farm Bill Safety Net Pay Provides Small Cushion
Iowa Ag Connection - 10/19/2016

Final data on 2015 county level yields was recently released by the USDA Farm Service Agency. This is the final information needed for calculating payment rates under the Agriculture Risk Coverage-County (ARC-CO) program.

The Marketing Year Average (MYA) prices for the marketing year starting Sept. 1, 2015 and ending Aug. 31, 2016 were $3.61 for corn and $8.95 for soybeans. The payments released by the USDA Farm Service Agency starting in October 2016 are for crop acres enrolled during the 2015 crop year.

Payments under the 2014 Farm Bill are tied to the base acres on a farm and are not influenced by the crop grown in the payment year.

Under the ARC-CO program, producers receive payment on 85 percent of their base acres. This 15 percent reduction is factored into the values seen in the related figures. Furthermore, a 6.8 percent deduction is applied due to the federal government's sequestration of the budget. Seven counties (Appanoose, Decatur, Henry, Lucas, Marion, Monroe and Washington), all located in the south central and southeast portion of the state, will not see a payment for corn or soybean acres.

Eight counties (Clarke, Jefferson, Keokuk, Pottawattamie, Ringgold, Van Buren, Warren and Wayne) will receive a payment on soybean acres and not on corn. Another 26 counties will receive a corn payment and no soybean payment (Adair, Bremer, Buena Vista, Calhoun, Carroll, Cerro Gordo, Clay, Davis, Dickinson, Emmet, Floyd, Franklin, Guthrie, Hancock, Howard, Humboldt, Kossuth, Madison, Mitchell, Monona, Palo Alto, Pocahontas, Sac, Winnebago, Worth and Wright). Base acres enrolled in ARC-CO in the remaining fifty-eight counties will receive a payment at some level for both crops.

With the 2014 Farm Bill, Iowa producers had two options to choose from, ARC-CO or Price Loss Coverage (PLC). The PLC program provided a safety net for producers should the MYA prices be below the set reference prices of $3.70 for corn and $8.40 for soybeans. No payments were seen in Iowa under the PLC program for 2014, but a small payment will be received for corn base acres enrolled in PLC for 2015. The payment per bushel will be $0.07 (after 6.8 percent sequestration) and based on yield information at the farm level. Producers were given the option to update their yield information with FSA during program sign-up.

The average ARC-CO payment per base acre on corn was $33.51 and $15.68 for soybean acres in Iowa. With over 22 million base acres in the state enrolled in ARC-CO or PLC, estimated payments for Iowa producers under ARC-CO for the 2015 marketing year is approximately $646 million with another $3.8 million going towards corn base acres enrolled in PLC.

More information on the 2014 Farm Bill, including decision tools to see detailed calculations of payments by county, are available through the Ag Decision Maker website. Maps of payments can be found through the Center for Agricultural and Rural Development Farm Bill mapping tool. Projections for 2016/17 payments are updated regularly as information is released by USDA FSA.

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