County yield estimates for corn and soybeans published by USDA Feb.23 should let farmers estimate the potential size of farm program checks they’ll receive for 2016 crops this fall. Most growers should get a significant payment under ARC-County for corn, but not for soybeans.

The outlook for 2017 looks far different. Revenue guarantees for both crops will be much lower, making payments less likely than at any time since the 2014 Farm Bill was passed. Payments could still be triggered if prices or yield plunge. But for planning purposes, assuming average yields means the check may not be in the mail.

Sobering outlook
Of course, actual program yields will vary from county to county – that’s the way ARC-County is designed after all. But looking at prospects based on national yields is sobering.

Four straight years of falling corn prices, and three for soybeans, create benchmark prices around $3.92 for corn and $10.87 for soybeans, the lowest so far. Program prices are the Olympic average of U.S. cash prices for the five previous years, dropping out the high of low for that period.

To be sure, the benchmark yields for the typical grower will be higher, Three record corn yields in a row – four in the case of soybeans – will see to that.

The average corn program yield for 2017 looks to be up almost 9%. But the increase in yields won’t offset the drop in prices. The Olympic average price used in the payment formula could be down 26% from where it started in 2014. After holding at $5.29 the first two years of the program, the benchmark price fell to $4.79 for 2016. Based on current USDA estimates, the benchmark could fall to $3.92 for the 2017 crop. The revenue guarantee could be 14% lower on average.

The drop in soybean potential doesn’t look as bad. But that’s because soybeans provided less of a benefit than corn to begin with. Average benchmark yields are up 8% from 2014, and prices off 11%, so the bean math doesn’t add up either. Revenue guarantees could be an average of 4% lower for 2017 compared to 2016.

This declining support comes as farm program payments reach their highest level in a decade, comprising 22% of net farm income for 2017. If history is a guide, that could work against those in Congress who would like to slash, or even eliminate, farm program spending.

Big changes?
Big changes in farm policy tend to come when farm income and prices are either very high or very low. The 1985 Farm Bill, passed in the depths of the 1980’s crisis, introduced market-based reforms. The so-called Freedom to Farm law of 1996 came in the wake of then-record corn prices that helped push net farm income to an all-time high. Some thought that would be the last farm bill. But another round of low prices led to a beefed up law in 2002. The 2014 bill, passed a year late, came as prices were pulling back from records set after the 2012 drought, focusing attention on revenues, not yields.

While ARC supports may be falling, guarantees from crop insurance should be higher. That protection could be more important than ever as growers sign up for coverage this month.