Confused about farm program payment variability?

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Oct. 30, 2015 - The days of direct payments are over and so is some of the predictability about whether an individual grower will receive payments. That's likely to cause some consternation, especially when growers of one crop in one county receive payments while growers in a neighboring county do not. USDA started issuing checks totaling about $3.9 billion this week.

How does that happen? It's basically a function of how the new Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) were structured in the 2014 farm bill to provide assistance during periods of market downturns. In addition, the $125,000 payment limitation and adjusted gross income (AGI) test can further temper payments.

To better understand some of the payment variations under the county-based ARC program, USDA's Farm Service Agency posted new background information. For example, FSA shows three different sample counties with the same benchmark revenue for corn but with 2014 yields varying from 197 bu./acre to 160 bu./acre. Payments range from zero to$73.00/acre to over $135/acre - but then limited to 10 percent of the benchmark revenue or $84.64/acre.

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To see the examples, go to this page:

http://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/arc-plc/docs/ARCPLC_facts_examples.docx

As FSA officials point out on their web page, “the key component explaining differences in ARC-CO payment rates between neighboring counties is yields. County average yields are based on the highest precision national statistics from the USDA National Agricultural Statistics Service (NASS). (Where that data does not exist, then the next strongest data is used, as follows: Risk Management Agency county; NASS district; or State Committee determined yields).”

On the same web page, FSA also posted new county-by-county maps that show revenues for 2014 corn, soybean and wheat crops - both with and without the ARC-CO safety net.

For 2014 corn crop revenue with ARC-CO safety net

http://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/arc-plc/pdf/US_CornSupRev14.pdf

For 2014 corn crop revenue without ARC-CO safety net

http://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/arc-plc/pdf/US_CornActRev14.pdf

For 2014 soybean crop revenue with ARC-CO safety net

http://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/arc-plc/pdf/US_SoybSupRev14.pdf

For 2014 soybean crop revenue without ARC-CO safety net

http://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/arc-plc/pdf/US_SoybActRev14.pdf

For 2014 wheat crop revenue with ARC-CO safety net

http://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/arc-plc/pdf/US_WheatSupRev14.pdf

For 2014 wheat crop revenue without ARC-CO safety net

http://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/arc-plc/pdf/US_WheatActRev14.pdf

All of the above pages are available here:

http://www.fsa.usda.gov/programs-and-services/arcplc_program/index

For PLC, payments are made when market year average prices are below reference prices - very similar to the counter-cyclical program that many growers are familiar with. For 2014, most of the PLC payments will likely go to producers with peanut, long grain rice, or canola base or producers who planted peanuts, long grain rice, or canola on generic base acres. 


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The PLC payment rate for long grain rice will be announced the first week in November and for canola, the first week of December. For all other program commodities, the market year average price exceeded the reference price set in the 2014 Farm Bill and no payments will be forthcoming for 2014.

So what can you do if you are unhappy with your USDA payment or lack thereof? There aren't many alternatives, but FSA recommends talking to your local officials if you have questions. If you are a multi-county farmer enrolled in ARC-CO, there may be some flexibility - until August of 2016 - to switch your administrative county upon with ARC-CO payments are based. If a farm is located in one county but administered in another county, the ARC-CO payment rate in the administrative county will determine the payment rate.

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