Dakota Farmer

8 things to know about wheat program payments

North Dakota farmers should receive about $150 million beginning in October.

July 25, 2016

3 Min Read

In October, you should start receiving your share of about $150 million in safety net payments on wheat base acres from the 2015 crop year, says Andrew Swenson, North Dakota State University Extension farm management specialist.

However, some counties may not be eligible for payments to do high yields.

Here are eight things to know about the program payments:

1. The national average wheat price for the 2015 marketing year was $4.89 per bushel, compared with $5.99 in 2014. This is well below the reference price of $5.50, which was set in the 2014 Farm Bill and will trigger a 61-cent-per-bushel Price Loss Coverage payment rate.

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2. About one-fourth of the 9.6 million wheat base acres in North Dakota are enrolled in the PLC program. Those acres will generate payments of 61 cents per bushel multiplied by a farm’s wheat PLC payment yield multiplied by 85%. For example, the PLC payment calculation for a farm with 100 acres of wheat base and a 50-bushel PLC payment yield would be $2,592.50 ($0.61 payment rate x 50 bushel payment yield x 85% x 100 base acres). Actual payments will be somewhat less. The Budget Control Act of 2011 required the U.S. Department of Agriculture to reduce payments by 6.8% last year, and a similar sequestration of around 7% is likely this year.

3. About three-fourths of North Dakota wheat base acres are enrolled in the Agriculture Risk Coverage – County program. Whereas the PLC program considers only price, the ARC-CO program protects against revenue shortfall at the county level. Both prices and county yields are considered to determine the safety net and whether a payment is triggered.

4. The final 2015 average yield for all wheat grown in each county has not yet been released by the Farm Service Agency; however, there is preliminary information available for most of the counties. Based on this information, about one third of North Dakota counties will receive the maximum ARC-CO payment. “Depending on the county, the payment could range between $18 and $36 per wheat base acre.

5. About one-third of North Dakota counties will not receive a wheat ARC-CO payment because high yields in 2015 offset the low price and provided revenue above the revenue guarantee. However, the high 2015 yields should increase revenue guarantees and the likelihood of payments in future years.

6. About one-third of North Dakota counties should receive some ARC-CO payments on wheat base acres but less than the maximum payment.

7. Payments based on the 2015 crop year, will be made sometime after Oct. 1.

8. The increase in payments on wheat base acres only represents a partial safety net and is a fraction of the revenue lost in the marketplace due to low wheat prices.

NDSU Extension contributed to this article.

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