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Serving: IA
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PRICE SUPPORT: In Iowa, USDA will pay about $250 million for the ARC and PLC programs for 2019 crops.

How to project 2019 ARC-PLC payments

Payments are coming this fall for USDA farm program participants for the 2019 crop marketing year.

In October, most of Iowa’s farmers will be receiving 2019 Price Loss Coverage payments on their corn base acres. Also, in a few counties, Agricultural Risk Coverage County payments were triggered. However, PLC payments on soybean base acres are not expected.  

Statewide, it is estimated that $250 million in total will be paid out for both ARC-CO and PLC programs. These payments are for the 2019 crop and can only be projected at this time. That’s because the final national average cash price for the 2019-20 crop marketing year will not be determined until late September. Then payments can be finalized and paid by local USDA Farm Service Agency offices. 

Base acre election 

About 80% of eligible corn base acres nationwide were enrolled in the PLC program. This same amount, about 80% of the eligible soybean base acres, were enrolled in the ARC-CO program. Those final enrollment percentages for Iowa have not yet been determined and will include a few thousand farms that elected the ARC Individual (ARC-IC) program.  

The 2018 Farm Bill introduced multiple changes to the formulas used in the calculation of the ARC-PLC program. This included eliminating the restriction that producers had to elect one program for the five-year life of the 2018 Farm Bill. However, for the 2019 and 2020 crops, farmers were required to make a two-year election by farm, crop and base acres. Starting with the 2021 crop year, farmers can make this election annually on or before March 15 and then enroll. 

Small PLC payments on corn 

A PLC payment is triggered when the final national cash price for the marketing year falls below $3.70 per bushel for corn and $8.40 per bushel for soybeans. As of July 10, the projected national average cash price averages for the 2019-20 marketing-year are $3.60 and $8.55 for corn and soybeans, respectively. The PLC payments will likely be triggered for the 2019 crop for corn but not for soybeans. That payment will be roughly 10 cents per bushel multiplied by 85% of the corn base acres multiplied by the old PLC yield on the farm. 

A typical 2019 PLC payment for corn will be roughly $12 per corn base acre, depending on the old PLC yield on that farm. Farmers can update to a new PLC yield before Sept. 30, and that yield can be used beginning for the 2020 crop.  

ARC-CO payment calculations 

ARC-CO payments are calculated by comparing the 2019 projected county crop revenues against the ARC-CO benchmark revenues. The 2019 projected county crop revenues are obtained as the product of the 2019 final county yields from USDA’s Risk Management Agency.

The projected 2019-20 marketing year national average cash prices are from the July 10 USDA World Agricultural Supply and Demand Estimates report. Benchmark revenues are calculated using the 2013-14 through 2017-18 trend-adjusted county yields from RMA and the marketing-year national average cash prices from FSA. 

ISU Extension economists project the ARC-CO payments to range from zero to $65 per corn base acre and from zero to $49 per soybean base acre in Iowa on nonirrigated farms (Figures 1 and 2). The estimated payments assume a 6.8% sequestration. These final payments will be released in late September. 

Projections are that 13 counties will receive ARC-CO payments for both corn and soybean base acres, four counties will receive payments for corn base acres only, and 44 counties will receive payments for soybean base acres only. These counties had lower 2019 final county yields that were released in late June 2020 by RMA.  

Figure 1. Projected 2019 ARC-CO payments per corn base acre (nonirrigated)  

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Figure 2. Projected 2019 ARC-CO payments per soybean base acre (nonirrigated)  

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Irrigated base acres 

Another change introduced in the 2018 Farm Bill was to differentiate between irrigated and nonirrigated acres on a farm. In Iowa, 24 counties have irrigated corn or soybean base acres approved for the ARC-CO program.

For irrigated farms, the projected 2019 ARC-CO payments range from zero to $66 per corn base acre, and from zero to $52 per soybean base acre, after sequestration. Four counties will receive ARC-CO payments for irrigated soybean and corn acres, four counties will receive payments only for irrigated corn acres, and five counties will receive payments for only irrigated soybean base acres. 

To determine the projected 2019 ARC-PLC payments for your county by crop and irrigated versus nonirrigated practice, use the ARC-PLC Payment Estimator

Johnson is an ISU Extension farm management specialist. Email sdjohns@iastate.edu

 

 

 

 

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