Minding Ag's Business

Farm Program Payment Jitters

Prices are in for major 2014 crops, but the verdict on what Agricultural Risk Coverage (ARC) pays per county remains unsettled. The Farm Service Agency must fill in the blanks on a number of counties lacking NASS yields for 2014 before it can officially calculate program payments due in October. These are counties lacking enough statistical information to create a reliable yield average, so FSA must track down crop insurance records, or in some cases allow county committees to divine the yields. In ARC's case, bumper county yields could erase what would otherwise be a farm program payment in the $60-$70s/acre for many Midwest corn producers. Sometimes the "have" and "have not" counties border each other.

Farm policy analysts speculate USDA is waiting to announce yields (what would normally have been the final puzzle in the payment equation) pending a final decision on how much checks will need shaved under the federal budget law. Sequestration mandated under a 2011 federal budget law could either trigger 6.8% or 7.3% cuts, if it kicks in as expected.

Season-average prices used to calculate 2014 farm program payments have been finalized by NASS, with only a few surprises: wheat $5.99, corn $3.70, sorghum $4.00 and soybeans $10.05.

The final prices mean growers who enrolled in the 2014 Price Loss Coverage (PLC) program will receive no payments on any of those crops, because price levels averaged above the fixed thresholds established in the 2014 Farm Act. Preliminary forecasts for peanuts, canola and long-grain rice continue to show PLC could be triggered for those crops.

After months of meticulously tracking and forecasting PLC and ARC payments, only sorghum was a surprise to Kansas State University economist Art Barnaby. Grain sorghum ended the 2014 marketing year at a 33 cent premium to corn, prompted by a Chinese buying spree of GMO-free grain. "I had always expected sorghum to fare better under PLC than ARC, and if it had a normal basis, it would have had a sizable PLC payment," he said. "If USDA still reports a premium for September sorghum prices, I’ll have a heart attack."

Go to http://www.agmanager.info/… for a payment calculator by US county and crop, and a map of Kansas county payments.

For alerts on DTN farm business coverage, follow me on Twitter@MarciaZTaylor


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