Minding Ag's Business

ARC/PLC Payments Continue to Decline

Katie Micik Dehlinger
By  Katie Micik Dehlinger , Farm Business Editor
USDA began mailing out about $3 billion in safety net payments for the 2017 crop this month, less than half of what it issued in 2016. (DTN file photo)

USDA began issuing checks, worth about $3 billion in total, for last year's Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs this month. While any form of cash assistance in these tough economic times is generally considered good news, that total is less than half of 2016's $7 billion payout. At the same time, some early forecasts for 2018 payments on crops currently being harvested don't show much of a payment at all.

USDA's press release stresses that even though the 2014 Farm Bill expired, it's still making payments as mandated by statute.

"These program payments are mandated by Congress, but the Department has taken measures to ensure we meet our deadlines and get capital in the hands of those folks that need it most," Agriculture Secretary Sonny Perdue said. "Unfortunately, 2018 has proven to be another tough year for producers across the Nation, making the timeliness even more critical."

Yes, the payments are indeed timely for farmers that will receive them, but the real story is the steep decline from last year, especially in the "I" states, Nebraska and Minnesota. The table below includes a selection of Corn Belt and Great Plains states and shows the total combined payments under the ARC and PLC programs.

ARC/PLC PAYMENT TOTALS BY STATE
STATE 2016 2017 % CHANGE
ILLINOIS $382,750,371 $60,001,397 -84%
INDIANA $292,662,569 $56,014,542 -80%
IOWA $230,745,179 $42,975,949 -81%
KANSAS $455,053,078 $281,518,497 -38%
MINNESOTA $221,227,991 $41,449,132 -81%
MISSOURI $249,152,405 $85,068,014 -65%
NEBRASKA $647,984,675 $114,611,662 -82%
NORTH DAKOTA $366,428,015 $259,236,837 -29%
OHIO $284,803,377 $65,932,723 -77%
OKLAHOMA $173,725,787 $96,302,233 -45%
SOUTH DAKOTA $258,328,776 $184,425,795 -29%
TEXAS $688,372,552 $296,963,015 -57%

If you want to take a deeper look at these numbers or the breakout of ARC vs. PLC payments, you can find those tables and more, here: https://www.fsa.usda.gov/…

A majority of corn farmers in the states showing the steepest declines in payments from 2016 to 2017 elected to enroll in the ARC program. ARC relies on Olympic averages that take five years of price and production history, discard the highest and lowest figures and average the remaining figures to arrive at its benchmarks. Over the past five years, yields marched higher while prices stayed stubbornly low, leading to lower payments.

A recent FarmDoc Daily blog walks through how the 2017 ARC-CO payments are calculated for corn, soybeans and wheat in three different counties across the state. The blog also includes national maps for each crop, which shows highlights the pockets of production where farmers can expect payments. You can find it here: https://farmdocdaily.illinois.edu/…

It shows that benchmark prices for corn in 2018 is $3.70 per bushel, 25 cents below last year. For soybeans, the benchmark price will be $1.23 lower per bushel at $9.63. Wheat's price benchmark, at $5.66 per bushel, is 46 cents lower than 2017.

County yields, and therefore reliable estimates of 2018 ARC-Co payments, won't be determined until the National Agricultural Statistic Service releases county yields in February. But as the FarmDoc blog concludes: "ARC-CO payments likely will not be prevalent for 2018 production. Building $0 per acre into cash flow estimates for the 2018 payments that will be received in fall 2019 seems prudent at this point."

Katie Dehlinger can be reached at Katie.dehlinger@dtn.com

Follow her on Twitter @KatieD_DTN

(AG)

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