The USDA National Agricultural Statistics Service (NASS) released the 2014 estimated average county yields for corn, soybeans and other crops in late February. These yields will offer a pretty good estimate of where final Ag Risk Coverage-County (ARC-CO) farm program payments are likely to end up for the 2014 crop year. ARC-CO payments for 2014 will not be finalized until after Sept. 30, 2015, and payments will occur in October 2015.
The 2014 NASS county yields for corn, soybeans, and other crops are available on the NASS website. Once on the site, click on the desired state, find the appropriate crop and county, and look for the 2014 yield.
Producers have until March 31, 2015 to complete their farm program choice at local USDA Farm Service Agency (FSA) offices. Farm program choices include the Price Loss Coverage (PLC), Agricultural Risk Coverage-County (ARC-CO) or Agricultural Risk Coverage-Individual Coverage (ARC-IC) programs. They can potentially make different choices for each crop on a given FSA farm unit. USDA has also extended the deadline to March 31, 2015, for producers and landowners to finalize decisions on crop base acre reallocation and updating FSA payment yields.
2014 ARC-CO payments for a given crop will be paid when the actual 2014 county revenue for that crop falls below the 2014 county revenue guarantee for that crop. The actual county revenue is the 2014 NASS county yield times the final market year average (MYA) price for 2014. The 2014 MYA price is the national average corn or soybean price from Sept. 1, 2014 to Aug. 31, 2015. The MYA prices are finalized on Sept. 30, 2015.
The estimated 2014 MYA prices range from $3.60-3.90 per bushel for corn, and $9.70-10.25 per bushel for soybeans. As of mid-February, USDA was estimating the 2014 MYA prices at $3.65 per bushel for corn, and $10.20 per bushel for soybeans. By comparison, Kansas State University is estimating the 2014 MYA prices at $3.77 for corn, and $9.74 for soybeans. As the 2014 estimated MYA price for corn or soybeans increases, the likelihood of a 2014 ARC-CO payment decreases, and vice versa. The MYA price estimate also influences any potential Price Loss Coverage (PLC) payment potential for corn, soybeans, and other crops.
The relationship between the 2014 NASS county yields and the 2014 county benchmark (BM) yields is extremely important in calculating the likelihood of any potential 2014 ARC-CO payments for corn and soybeans. Expressing the 2014 NASS County yield as a “percentage of BM yield” is actually more important than the final county yield in determining estimated ARC-CO payments. If the 2014 NASS county yield, expressed as a percent of BM yield is below 100%, it increases the likelihood of a 2014 ARC-CO payments for corn or soybeans. However, if the percentage of BM yield is above 100%, it decreases the likelihood of a ARC-CO payment for corn or soybeans.
There can be a significant difference in the estimated 2014 ARC-CO payments from county to county, depending on the 2014 county NASS yield. It appears that most Minnesota and northern Iowa counties are likely to receive the maximum 2014 ARC-CO payment for corn, or very close to the maximum payment. The ARC-CO estimates for corn may be different in states such as Illinois and Indiana that had much higher county NASS corn yields in 2014, and probably a much higher 2014 percentage of BM yield.
The estimated 2014 ARC-CO payment likelihood for soybeans in Minnesota and northern Iowa is significantly different than for corn, and will be totally dependent on the 2014 percentage of BM yield for a given county. There can even be a wide variation in neighboring counties. For example, Renville County in Southwest Minnesota is likely to receive close to the maximum 2014 ARC-CO payment for soybeans, due to having a 2014 percentage of BM yield of only 93%. However, neighboring Redwood County had a 2014 percentage of 102%, and will likely receive a very small 2014 ARC-CO payment for soybeans, if any at all. Be sure to check out the 2014 soybean percentage of bench mark yeild for a county before making assumptions on potential 2014 ARC-CO payments for soybeans.
Kent Thiesse has prepared an information sheet listing the calculation of ARC-CO payments, and the likelihood of 2014 corn and soybean ARC-CO payments at various MYA price levels, and county percentage of bench mark yield levels. He has also prepared an adjoining chart listing the 2014 County benchmark yield, the 2014 County NASS yield, and the percentage of BM yield for most counties in Minnesota and Northern Iowa. To receive a free copy of “Estimating 2014 Corn and Soybean ARC-CO Payments” and the adjoining county yield chart, e-mail: [email protected] or call (507) 726-2137.