Farm Program Payment Estimates - July 2017

Farm Program Payment Estimates - July 2017

Current estimates of farm program payments for Nebraska producers show continued support from farm programs for the 2016 crop that will be paid in October 2017, but likely very little support moving forward for the 2017 and 2018 crops (to be paid in 2018 and 2019).

Table 1 provides historic national marketing year average prices and current national marketing year price projections for the primary Nebraska crops for the 2014-2018 crop marketing years, the years covered by the 2014 Farm Bill programs. National marketing year average prices are used to calculate potential Price Loss Coverage (PLC) payments and Agriculture Risk Coverage (ARC) payments. ARC payments are also dependent on county yields in the case of the county-level ARC program (ARC-CO) or individual yields in the case of the individual coverage farm-level ARC program (ARC-IC).

Table 1. Prices and Price Projections by Crop Year*

* Final price estimates for 2014 and 2015 from USDA-NASS. Price projections for 2016 and 2017 from USDA-WAOB and USDA-FSA as of July 2017. Price projections for 2018 from USDA-OCE as of February 2017. Sources: USDA-FSA, USDA-NASS, USDA-OCE, and USDA-WAOB.
Commodity Prices
($/bushel)
2014 2015 2016 2017 2018
Corn 3.70 3.61 3.35 3.30 3.35
Grain Sorghum 4.03 3.31 2.65 2.90 3.15
Soybeans 10.10 8.95 9.50 9.40 9.40
Wheat 5.99 4.89 3.89 4.80 4.30

Table 2 provides estimates of average PLC payments and projected payments per base acre across Nebraska, accounting for average program payment yields across the state and the fact that payments are made on 85% of base acres. Actual payments will differ based on individual farm program payment yields. With lower prices and price projections, projected PLC payment rates have become significant. For wheat and grain sorghum producers with substantial base acreage enrolled in PLC, the payments have added and will add significantly to cash flow. However, only a fraction of the base acreage for corn and soybeans was enrolled in PLC and total PLC payments for these crops will be minimal in Nebraska. The estimated payment rates do not take into consideration budget sequestration, which has further reduced payments by approximately 7% each year.

Table 2. Average PLC Payment Rates and Projections in Nebraska by Crop Year*

* PLC payments and payment projections based on weighted average PLC payment yields in Nebraska. Payments based on prices for 2014-2015 from USDA-NASS, price projections for 2016-2017 from USDA-WAOB and USDA-FSA as of July 2017 and price projections for 2018 from USDA-OCE as of February 2017. Sources: USDA-FSA, USDA-NASS, USDA-OCE, and USDA-WAOB.
Commodity Average PLC Payment Yield (bushels/acre) Average PLC Payment Rates per Base Acre
($/base acre)
2014 2015 2016 2017 2018
Corn 150 0.00 11.47 44.59 50.96 44.59
Grain Sorghum 77 0.00 41.95 85.21 68.83 52.44
Soybeans 45 0.00 0.00 0.00 0.00 0.00
Wheat 41 0.00 21.19 55.93 24.32 41.68

 Table 3 provides estimates of average ARC-CO payments and projected payments per base acre across Nebraska, accounting for the fact that payments are made on 85% of base acres. The estimated payment rates are simple averages of all of the county-level and practice-specific payment rates calculated across the state for each crop. Thus, they provide a general index of payment rates as opposed to specific estimates. While ARC-CO payments have been substantial for crop years early in the 2014-2018 period, declining prices have lowered the 5-year Olympic average price that is part of the guarantee. Looking forward, ARC-CO payments are projected to be minimal for the 2017 and 2018 crop years based on average or trend yields and projected prices, although grain sorghum and wheat payments could be greater due to current price levels relative to minimum price levels in the guarantee. The estimated payment rates do not take into consideration budget sequestration, which has further reduced payments by approximately 7% each year.

Table 3. Average ARC-CO Payment Rates and Projections in Nebraska by Crop Year*

* ARC-CO payments and payment projections averaged across all counties and practices in Nebraska where data is available. Payments for 2014-2015 from USDA-FSA. Payment projections for 2016-2017 based on yield and price projections from USDA-NASS, USDA-WAOB, and USDA-FSA as of July 2017. Payment projections for 2018 based on Olympic average yields and price projections from USDA-OCE as of February 2017. Sources: USDA-FSA, USDA-NASS, USDA-OCE, and USDA-WAOB.
Commodity County/Practice Combinations Average ARC-CO Payment Rates per Base Acre
($/base acre)
2014 2015 2016 2017 2018
Corn 131 52.87 52.36 54.19 0.00 0.00
Grain Sorghum 103 18.59 21.67 33.51 30.45 21.09
Soybeans 112 15.56 28.46 0.79 0.00 0.00
Wheat 113 9.28 24.24 19.17 3.29 21.44

Payment estimates for each year from 2014 through 2018 by county, crop, and practice are available in a series of tables by year at the following links:

The 2014 and 2015 crop ARC-CO payment rates are included for historical reference. These payments are final and were paid out in October 2015 and 2016 respectively. The 2016 crop payment rates are based on current yield and price estimates and are still subject to final changes in both. These payments are due to be paid out in October 2017.

ARC-CO estimates for the 2017 crop are based on current aggregate yield estimates extrapolated to each county along with current price estimates.  Estimates for the 2018 crop are based on average yield estimates and baseline price projections. Updates for both years will be available as yield and price estimates are released.

Payment estimates are not available for ARC-IC due to the complexity of the calculation and the farm-specific acreage and yield information in the formulas. However, the total payments in Nebraska are minimal due to the very limited sign-up for ARC-IC in the state.

Posted by Bradley D. Lubben, Saturday, August 5, 2017