Estimated corn and soybean ARC-CO payments for 2015

Most crop producers in the Upper Midwest are enrolled in the county yield-based Ag Risk Coverage (ARC-CO) farm program choice on their corn and soybean base acres for the 2014 to 2018 crop years. Many farm operators in this region earned a significant 2014 ARC-CO payment on their corn base acres, while farm operators in some counties also earned a substantial 2014 soybean ARC-CO payment. Many producers are now wondering what the 2015 ARC-CO payments will be, which will be paid in October 2016, given that average corn and soybean price levels have remained quite low.

The benchmark (BM) prices for corn and soybeans for the 2015 crop year remained the same as 2014 BM prices, which are $5.29 per bushel for corn and $12.27 per bushel for soybeans.

The county BM yields in most Minnesota counties declined in 2015, as compared to 2014 BM yields, due to the very low average county yields in much of the state in 2014. Another factor was that 2009 was a very strong yield year in most areas, which was used in the 2014 BM yield calculation, but was dropped in the 2015 calculation. Many counties in south-central, southwest and central Minnesota had the county BM corn yields decline by 6-12 bushels per acre from 2014 to 2015. The declining county BM yield lowers the potential maximum ARC-CO payment per crop base acre, as well as lowering the potential for ARC-CO payments at similar actual corn yield levels in a given year. County soybean BM yields did not vary greatly from 2014 to 2015, except in a few counties.

2015 ARC-CO payments for a given crop are paid when the actual 2015 county revenue for the crop falls below the 2015 county benchmark (BM) revenue guarantee. The actual county revenue is the final 2015 county FSA yield times the final MYA price for 2015. The 2015 MYA price is the national average corn or soybean price from September 1, 2015 to August 31, 2016. The MYA prices will be finalized on September 30, 2016. As of Feb. 29, 2016, the estimated 2015 MYA prices are $3.60 per bushel for corn, and $8.80 per bushel for soybeans.

The USDA National Agricultural Statistics Service (NASS) recently released the 2015 estimated average county yields for corn, soybeans, and other crops. The 2015 NASS county yields will offer a good estimate of where final 2015 ARC-CO farm program payments are likely to end up, depending on the final 2015 MYA price level. The NASS yields may be adjusted slightly by USDA to arrive at the final 2015 county FSA yields, which are used to calculate the 2015 ARC-CO payments. The 2015 NASS county yields are available on the NASS website.

For corn, any county that has a “% of BM yield” of 111% or less will likely realize the maximum estimated 2015 ARC-CO payment for that county. Counties with a “% of BM yield” of 112% to 119% will likely receive 50% to 95% of the maximum 2015 ARC-CO payment. Counties with a “% of BM yield” of 120% to 125% will likely receive 5% to 45% of the maximum payment. Counties that had a “% of BM yield” of 126% or higher will likely not receive a 2015 corn ARC-CO payment.

For soybeans, any county that has a “% of BM yield” of 106% or less will likely realize the maximum 2015 ARC-CO payment for that county. Counties with a “% of BM yield” of 107% to 112% will likely receive 60% to 95% of the maximum 2015 ARC-CO payment. Counties with a “% of BM yield” of 113% to 120% will likely receive 5% to 55% of the maximum payment. Counties with a “% of BM yield” of 121% or higher will likely not receive a 2015 soybean ARC-CO payment.

There will likely be a large difference in the 2015 corn ARC-CO payments from county-to-county, depending on the final 2015 county yield, expressed as a “% of BM yield”. It appears that most counties in southern and western Minnesota, as well as much of Iowa and the eastern Dakotas will get a partial 2015 corn ARC-CO payment; however, only a few counties in southeast Minnesota and eastern Iowa will get the maximum payment. Several counties in central Minnesota, as well as a few selected counties in other areas, will likely receive no 2015 corn ARC-CO payment. Expect for a few counties in southeast and western Minnesota, along with some counties in eastern Iowa and North Dakota, there will be little or no 2015 soybean ARC-CO payments in the region.

The estimated ARC-CO payments for corn and soybeans will be greatly different in many portions of Illinois, Indiana, Ohio, and other States in the Eastern Corn Belt, as compared to the Upper Midwest. Many areas of these States had much lower county yields in 2015, as well as a lower “% of BM yield”. The likely result will be that many counties in these States will receive the maximum, or close to the maximum, 2015 ARC-CO payments for both corn and soybeans.

There can also be a wide variation in the ARC-CO payment levels in neighboring counties. For example, the south-central Minnesota counties of Blue Earth, Le Sueur, Nicollet and Waseca all had similar estimated 2015 NASS county corn yields; however, the estimated 2015 corn ARC-CO payment level will vary considerably, due to the difference in “% of BM yield”.

Current listed 2015 corn and soybean ARC-CO payments are estimates, which are based on the 2015 NASS county yield estimates and the current MYA prices. Final 2015 ARC-CO payments could vary, based on changes in the MYA price levels between now and Aug. 31, 2016, or based on any adjustments made by USDA to arrive at the final 2015 FSA county yields. There will likely be a 6.8% Federal sequestration reduction on all 2015 ARC-CO payments that are paid in October 2016.

Previous county yields for corn, soybeans, and other crops, benchmark yields and revenues, 2014 FSA yields, 2014 ARC-CO payment levels, and other farm program information are available on the FSA ARC-PLC website. I have prepared an information sheet, Estimating 2015 Corn and Soybean ARC-CO Payments, along with adjoining 2015 ARC-CO payment estimate tables for most counties in Minnesota. To receive a free copy of the information sheet and tables, send an e-mail to [email protected].

TAGS: Soybeans Corn
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