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Calculate your projected ARC, PLC payments

ISU has new tools available to help farmers figure USDA financial safety net payments for crops.

Three new online resources have been developed by Iowa State University Extension to help Iowa corn and soybean producers calculate Agricultural Risk Coverage (ARC) and Price Loss Coverage payments for the 2014 and 2015 crop years. Posted on ISU's Ag Decision Maker website, the new tools will help farmers enrolled in either the ARC or PLC program calculate the amount of government payments they can expect to receive if crop prices and/or county revenues decline to qualifying levels.

The ARC and PLC programs are provided by the 2014 Farm Bill. Both the Agricultural Risk Coverage and Price Loss Coverage payments depend on the marketing year average, or MYA, prices for commodities such as barley, corn, grain sorghum, oats, soybeans and wheat.

Figure projected payments for crops in USDA program
For corn and soybeans, the official 2014 MYA price will be announced by USDA in late September 2015. Until then, the actual amount of these payments will be unknown. However, using county FSA yields and price projections published by USDA, these payments for the 2014 and 2015 crop years can be reasonably projected by the new calculation tools.

The projected prices used in the 2014 ARC/PLC payment calculator are updated monthly by ISU from USDA World Agricultural Supply and Demand Estimate Report.

The Agricultural Risk Coverage "county" program option is based on county revenues and acts like a type of additional revenue insurance product for crop producers. When county revenues fall below a certain level, farmers who have selected this coverage, are paid the slight difference. Payments, if made, aren't received until approximately one year after the crop is harvested.

Price Loss Coverage payments offer protection when the actual crop price drops below its 'reference price' for that commodity, as set in the 2014 Farm Bill. PLC payments occur if the MYA price is lower than the reference price of $3.70 per bushel for corn, and $8.40 per bushel for soybeans. These prices stay the same throughout the life of the five-year farm program.

What if payments are triggered for 2014 and 2015 crop years?
If payments are triggered for 2014 and 2015 crop years, when can farmers expect to receive the payments? If ARC/PLC payments are triggered for the 2014 crop year, they will be issued after the end of the marketing year when USDA announces the official MYA price, but not before October 1, 2015. The 2015 crop year ARC/PLC payments won't be verified until the fall of 2016.

For details on the calculation tools, USDA base acres and program payment yields, see the online Ag Decision Maker articles New ARC-CO and PLC Spreadsheets Calculate Projected Payments and New Safety Net: PLC, ARC-CO, ARC-IC.

To download the new spreadsheet tools PLC Payment Calculator, ARC-CO 2014 Payment Calculator and ARC-CO 2015 Payment Calculator, go to the complete list of Decision Tools on the Ag Decision Maker website. In order to use the calculators, Plastina says your computer will need to have Microsoft Office Suite and the Excel program.

SUMMING UP: Three new tools are available from ISU Extension to help farmers project their potential farm financial safety net payments for crops. The tools can be used to calculate payments for USDA's ARC and PLC programs. These new online resources are available on ISU's Ag Decision Maker website.

For farm management information and analysis visit ISU's Ag Decision Maker site at extension.iastate.edu/agdm; ISU farm management specialist Steve Johnson's site is at extension.iastate.edu/polk/farm-management.

Editor's Note: Alejandro Plastina is an Iowa State University Extension ag economist at Ames. He can be contacted at plastina@iastate.edu.

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