Farmers with the administration of their farms consolidated at one FSA office may want to examine their ARC-CO projected payments for 2016 to 2018. If no decision to change is made, ARC-CO payments will be calculated on the average yields for the administrative FSA office county, regardless of where the land is physically located. Earlier in the year, FSA announced that farmers could elect to have the 2014 and/or the 2015 ARC-CO payments calculated on the county in which the land is physically located. For some farms this was financially beneficial. However, do not expect 2016 to be like previous years since the high yields that reduced payments in a few locations (Defiance County 2014, and Ross County 2015) are now included in the formula to determine the payment.
Visual maps for farmers to reference for the 2016 to 2018 payment projections have been created. With the assumption that corn and soybean yields will average 5% above the county Olympic average for 2016 and wheat yields will average 10% above the county Olympic average for 2016. The Market Year Average (MYA) price is currently estimated by USDA to be $3.50 for corn, $9.50 for soybeans, and $4 for wheat. Lower prices and/or lower yields could improve the ARC-County payment while higher prices or higher yields could erode the projected payment.
These maps give a quick visual for ARC-CO corn, soybean, and wheat payments by county with payments rounded to the nearest dollar. The maximum potential payment for each county is listed followed by (in parenthesis) the expected payment based on the above assumptions. Farmers can quickly look to see if the land in a neighboring county, that is not their administrative county, had a significantly different payment. Based on this information, they can decide if they want to elect to be paid based on the farmland’s county or keep it in their current county of administration. Check with FSA to determine the process you will need to follow to make any changes.
Farmers may also want to consider potential payments for 2017 and 2018 into this decision. Using the assumption that we will have average yields and the same MYA prices as used for 2016, there will not be ARC-County payments for corn and soybeans those years. Most of this is due to a significantly lower revenue guarantee as the high price years of 2012 and 2013 are no longer in the Olympic average or are thrown out as the high year in calculating the Olympic average. Significantly lower actual prices or yields could generate some level of payment, but the maximum will be reduced by 50% from 2016 projections. Wheat is the only crop that which may make some payments, but they will be smaller with the 2017 and 2018 payments combined running in the $30 to $45 range per base acre with an estimated two-thirds paid for 2017 and the other third paid for 2018.
The prices listed on the maps are the best guess estimate of the actual payment rate per acre. However, if farmers want to estimate ARC-CO payments for their farm, they would need to make two adjustments. First the program pays on 85% of the base acres, one would need to multiply the amount by 85% to adjust for this reduction. Secondly there would need to be an adjustment if Congress creates a sequestration deduction.
Farmers with land in more than one county have until Aug. 1to make the permanent decisions for 2016 through 2018’s ARC-CO payments. This does not affect farms enrolled in ARC-Individual or the PLC program. The 2016 and beyond estimates are based on current best information provided by Farm Services Agency and the National Agricultural Statistics Service. These numbers can change in the
coming months and are provided as a guide only. Please use your own judgement and assumptions when making the determination for the 2016 ARC-CO payment county decision.