Potential Oklahoma ARC-CO Payments for 2014-2015 Crop YearWed, 21 Jan 2015 15:08:58 CST
Commodity producers have several choices in the 2014 farm bill and the deadlines are approaching. The deadline to update payment yields and/or reallocate base acreage is February 27, 2015. The deadline to elect county Agriculture Risk Coverage (ARC-CO), individual Agriculture Risk Coverage (ARC-IC), or Price Loss Coverage (PLC) is March 31, 2015. Producers will make a one-time election of ARC-CO, ARC-IC, or PLC by the March 31, 2015 deadline and the choice will remain with the farm for the life of the farm bill.
For ARC-CO, county yield data is used to calculate payments. The 2014/15 payment is based on 2014/15 county yields and the 2014/15 Marketing Year Average (MYA) price (along with the benchmark revenue which is based on prices/yields for the 2009-2013 crop years). For the 2014/15 crop, producers do have a bit of an advantage since this crop has already been harvested. The marketing year for the 2014/15 wheat crop is June 1, 2014 - May 31, 2015. Therefore, by the election deadline on March 31, 2015, only a few months will remain in the 2014/15 wheat marketing year (and the MYA price calculation). For these calculations, the 2014/15 MYA price estimate of $6.13 from Art Barnaby (KSU) was used. For information on how this price is determined, click here for the information from K-state.
For the ARC-CO yield, the Farm Service Agency (FSA) uses the National Agricultural Statistical Service (NASS) county harvested yield and adjusts for failed acres. NASS just released 2014 wheat yields for many counties. NASS county yield data can be seen by clicking here. The final ARC-CO yield from FSA is not available yet but it is generally lower than the NASS yield after the failed acre adjustment (which may understate the size of some ARC-CO payments). However, for many Oklahoma counties, the maximum ARC-CO payment will be triggered using the NASS yield and the estimated MYA price so the payment wouldn't change if the FSA yield is actually lower. Of course, it is important to remember that the MYA price and county yields are not final and the ARC-CO payments shown below are not guaranteed.
The tables that are in a PDF file that you can click on here show estimated ARC-CO wheat payments for most Oklahoma counties (a few have NA since NASS has not released the 2014/15 county wheat yield). A PLC payment will not be triggered on wheat unless the MYA price is below $5.50 (which is the reference price). This appears unlikely for the 2014/15 crop year. However, producers are making the election for the life of the farm bill and should not only consider the 2014/15 crop year when making an election decision. In future years, if the MYA price is below $5.50, a PLC payment could be higher than an ARC payment. Producers who elect PLC also have the option to purchase the Supplemental Coverage Option (SCO) crop insurance product. In some cases, a producer may want to elect ARC-IC. Producers should evaluate each option for their own farms before making any decisions.
OSU extension is providing assistance with these decisions. Click here for the latest schedule of several computer labs that will help you review your options.
Disclaimer: All analysis is based on the interpretation by Dr. Campiche of the bill language and information released from FSA and NASS. The information provided in this presentation is designed to provide further understanding of programs in the 2014 farm bill and not to project actual payments. Prices and yields used in these examples are only estimates.
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