Helping farmers through challenging times

Helping farmers through challenging times

USDA's Farm Service Agency focuses on farm financial safety net programs.

FAQ: With record-breaking production and yields for corn and soybeans being harvested this fall, lower-than-expected commodity prices are projected for both crops. What USDA price support programs are available? How can I use them?

Answer: John Whitaker, state executive director of the Farm Service Agency (FSA) in Iowa, provides the following review of key factors related to the Agriculture Risk Coverage (ARC) & Price Loss Coverage (PLC) programs.

ASSISTANCE AVAILABLE: Faced with low commodity prices and a big crop this fall, farmers are coming into FSA offices to talk about servicing existing loans or restructuring payment schedules. They’re also asking questions about price support programs.

“The 2016 August and September USDA Crop production reports forecast record-breaking production and yields for corn and soybeans and project lower-than-expected commodity prices for both crops,” says Whitaker. “As such, producers should brush up on ARC/PLC provisions in the event payments ‘trigger’ for these safety net programs.”

Question: What are the payment calculations used for the ARC County (ARC-CO) program?

Answer: The ARC-CO program provides revenue loss coverage at the county level. ARC-CO payments are issued when the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for the covered commodity.

ARC-CO farm payments are calculated using the following formula (example for corn):

Corn Base Acres x Payment Percentage (0.85) x Crop Share x ARC-CO Payment Rate = producer payment

(The ARC-CO payment rate for 2015 crops will be announced in the fall of 2016).

Payments are made using the farm’s contract base acres and do not require the actual planting of a covered commodity crop.

Question: How are Benchmark Yields, Marketing Year Average Prices and Revenues determined for the 2015 ARC-CO program?

Answer: This is an often-asked question.

* Benchmark Farm Yield - Benchmark Farm Yield means, for years the covered commodity was planted, five years of actual average farm yields with a 70% of the county T-yield being substituted for in each year in the benchmark where the actual yield is less than 70% of the county T-yield. For years the covered commodity was not planted, the benchmark farm yield for the covered commodity will be assigned 100% of the county average yield.

The T-yield is based on the 10-year historical average yield for a crop. The T-yield is used when records for at least four years (in succession) are not available.

* Marketing Year Average (MYA) Price - MYA price means the national average price received by producers during the 12-month marketing year, as determined by FSA, for the relevant crop of the covered commodity.

* Benchmark County Revenue - Benchmark revenue for ARC-CO means the product obtained by multiplying the average historical county yield excluding each of the crop years with the highest and lowest yields times the MYA price excluding each of the crop years with the highest and lowest prices for the most recent five crop years.

Question: When are payments for the 2015 ARC-CO program issued?

Answer: Once it is determined and announced that a commodity has, “triggered” a payment, the payments are issued immediately at the end of the marketing year.

The marketing year for both corn and soybeans ended August 31, 2016. Producers can typically expect payments to be issued in early October.

Question: Is there a requirement to certify (report) all crops on a farm in order to be eligible for an ARC/PLC program payment?

Answer: Yes. The ARC/PLC program requires a full farm certification. Producers on the farm are required to certify or report all crops on cropland including forage or hay crops with an intended use of forage or grazing. Forage crops have a different end reporting date from annual row crops.  Additionally, producers are required to report all cover crops and small seeded grains.

For 2016 forage crops, the deadline to certify in Iowa was Dec. 15, 2015, and row crops such as corn and soybeans were to be certified by July 15, 2016. Producers who chose not to certify a crop or crops by those deadlines can submit a “Late-File” acreage report and pay the applicable late file fee. 

If producers decide to not submit a late file acreage report for those missing crops, then the farm will not be eligible for ARC/PLC program payments.

Additional Farm Service Agency Resources: ARC and PLC data including ARC-CO yields and projected and final PLC payment rates is available on FSA’s website fsa.usda.gov/arc-plc. For more information about programs offered by FSA, please visit us online at fsa.usda.gov or subscribe to our electronic news service at fsa.usda.gov/subscribe.

TAGS: Soybean
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