NDSU Extension - Mercer County

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Farm Bill Payment Calculator Available for 2019 Cash Flow Estimates

farm bill payment calculator, NDSU farm bill, Agricultural Risk Coverage (ARC), Price Loss Coverage (PLC)

Submitted by Craig Askim, Extension Agent/Agriculture and Natural Resources

The 2019 growing season is right around the corner and currently the outlook for an increase in market prices seems to be a challenge, therefore, producers will need to take a closer look at marketing and budgeting options to be successful in 2019. The government ARC or PLC payments are a large percentage of the profits available to producers. Below is a tool developed by NDSU that allows you to get an estimate of what the payments will be in 2019. Once this information is obtained, it will provide resources for you as a producer to make budgeting decisions for the 2019 cropping year. 

A calculator developed by North Dakota State University Extension to help producers estimate the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) payments they may receive in 2019 is available online.

Visit www.ag.ndsu.edu/farmmanagement/farm-bill or search for "NDSU farm bill."

The payments are for the 2018 crop year, but final determination and issuance of actual payments are not made until the last three months of 2019.

Producers face a challenging profit environment for 2019 and any source of revenue will be important in projecting cash flow, according to Andy Swenson, NDSU Extension farm and family resource management specialist.

"The most current U.S. Department of Agriculture (USDA) projection of 2018 marketing year average (MYA) prices indicate that base acres of wheat, corn, barley, canola, sunflowers, flax, safflower, small chickpea and sorghum should generate payments if enrolled in the PLC program," says Swenson. "Field peas are on the edge, meaning any reduction in the 2018 MYA price also would trigger a PLC payment."

PLC payments on a crop's base acres will vary from farm to farm according to the PLC payment yield.

After the adjustments for getting paid on 85 percent of base and a 6.6 percent sequestration rate, an average PLC payment for each base acre of the crop would be about $46 for canola, $37 for sunflower, $26 for flax, $17 for barley and corn, and $11 for wheat.

The PLC safety net is triggered by low prices. Payments will be reduced or eliminated if prices rise, but the loss of revenue could be offset by greater income from the market if producers grow those crops.

"The ARC program is more complicated and difficult to project because it is a safety net triggered by the combination of price and yield," says Swenson.

Using current USDA price projections and average county yields for 2018, no ARC payments would be made for crops with the largest base acres in North Dakota; wheat, soybeans and corn.

Swenson estimates that with the current USDA MYA price projections, the 2018 county average yield would have to be at least 4 percent lower than the county benchmark yield to trigger an ARC payment for soybeans, 5 percent lower to trigger a payment for wheat and at least 9 percent lower to trigger a payment for corn.

Few, if any, counties will have these low yields because in 2018, the overall state average yield was a record high for wheat, the second highest on record for corn and the third highest on record for soybeans, Swenson adds.

Current USDA price projections indicate that if actual 2018 county yields are the same as the county benchmark yield, chickpea base acres would generate a maximum ARC payment, and lentils, safflower, canola, sunflower, flax and sorghum base acres would generate some payments if those crops were enrolled in ARC.

At USDA's current price projection, barley base acres enrolled in the ARC program would generate a payment if the county yield were one bushel or more below the county average yield.

Swenson notes that the 2018 MYA prices will not be known for several months and payment projections can change.

The ARC-PLC calculator will be updated each month with the latest USDA projections.

Source: Andrew Swenson, 701.231.7379, andrew.swenson@ndsu.edu

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