FOCUS ON AG

Written by Kent Thiesse

Farm Management Analyst and Vice President, MinnStar Bank
October 14, 2019
SOME COUNTIES QUALIFY FOR 2018 ARC-CO PAYMENTS
A limited number of farm operators in the Upper Midwest will receive 2018 farm program payments
during October from the USDA Farm Service Agency (FSA). Most crop producers in Minnesota and
surrounding States were still enrolled in the county yield-based Ag Risk Coverage (ARC-CO) farm
program choice on their corn and soybean base acres for the 2018 crop year. ARC-CO is based on both
crop yields and prices. The Price Loss Coverage (PLC) farm program option is a “price-only” program
that is based on national crop prices, which may be more popular for the 2019 and 2020 crop years.

The “market year average” (MYA) price for a given crop year is used to calculate any potential
payments for the PLC and ARC-CO programs. The historical MYA prices are also used to
determine the benchmark revenues for the ARC-CO program option. The MYA price for a given
commodity is not based on the Chicago Board of Trade (CBOT) commodity prices, or any specific
local or terminal grain prices. The MYA price is the 12-month national average price for a
commodity, based on the average market price received at the first point of sale by farm operators
across the United States. The USDA National Agricultural Statistics Service (NASS) collects grain
sales data on a monthly basis, which is then “weighted” at the end of the year, based on the volume
of bushels sold in each month.

The 12-month marketing year for corn and soybeans begins on September 1 in the year that a crop
is harvested, continuing through August 31 the following year, with MYA price being finalized on
September 30. For the 2018 crop year, the 12-month marketing period to determine the final
MYA price was from September 1, 2018 through August 31, 2019, with the MYA price being
finalized on September 30, 2019. The MYA marketing period for wheat and other small grain
crops is from June 1 in the year of harvest to May 31 the following year. The final 2018-19
MYA prices that were used for 2018 farm program payment calculations were $3.61 per
bushel for corn, $8.48 per bushel for soybeans, and $5.16 per bushel for wheat.

PLC payments are being made on any crops that had a final 2018-19 MYA price lower than the
established reference price for that crop. Corn had a final MYA price of $3.61 per bushel, compared to
a reference price of $3.70 per bushel, resulting in a PLC payment rate of $.09 per bushel. Wheat had a
final MYA price of $4.72 per bushel, compared to a reference price of $5.50 per bushel, resulting in a
2018 PLC payment of $.34 per bushel. So, any producers enrolled in the PLC program for corn or
wheat for 2018 will receive a PLC payment.

There were no 2018 soybean PLC payments, due to the final 2018-19 soybean MYA price being $8.48
per bushel, compared to a reference price of $8.40 per bushel. PLC payments are made on 85 percent
of FSA crop base acres for a crop times the established FSA yield on a particular farm. In most Upper
Midwest States, less than 10 percent of the corn and soybean producers are enrolled in the PLC
program. Approximately half of the wheat producers are in the PLC program.

Only six counties in South Central Minnesota, which had significantly reduced corn yields in 2018
due to excessive rainfall, are receiving a 2018 ARC-CO payment for corn. These counties include
Brown, Faribault, Jackson, Martin, Redwood and Watonwan. Some counties North Central Iowa, as
well as in the western half of North and South Dakota, will also receive 2018 corn ARC-CO
payments, due to yield reductions in 2018. A much larger number of counties in the Upper Midwest
and Plains States are scheduled to receive a 2018 ARC-CO payment for wheat.
There are only five counties in Minnesota scheduled to qualify for 2018 soybean ARC-CO payments,
including Faribault, Jackson, Martin, and Watonwan counties in South Central Minnesota, as well as
Kittson County in Northwest Minnesota. A much higher number of counties in Iowa, North and South
Dakota will receive 2018 soybean ARC-CO payments. Due to the decline in the 2018-2019 soybean
MYA price to $8.48 per bushel, which was well below the $9.63 benchmark price, a final 2018 county
yield that was only a couple bushels below the county benchmark yield resulted in the initiation of
2018 ARC-CO payments for soybeans.

Producers should be aware that most quoted ARC-CO and PLC payment rates per acre for corn,
soybeans, and other crops are on a gross payment per acre basis. These gross ARC-CO and PLC
payments need to be factored by 85 percent (.85), in order to arrive at an ARC-CO payment rate per
crop base acre. The 2018 ARC-CO and PLC payments are also subject to the required Federal
sequestration reduction of 6.8 percent (.068), which will affect the final total payment received by farm
operators.

Resources available on Estimating 2018 ARC-CO Payments :

 Kent Thiesse has developed an information sheet titled: “Estimating Final 2018 Corn and
Soybean ARC-CO Payments”, which looks at the final 2018-19 MYA prices and ARC-CO
payments for corn and soybeans, as well as a look ahead to 2019 ARC-CO payments. To
receive a copy of this information sheet send an e-mail to: kent.thiesse@minnstarbank.com

 The USDA FSA ARC/PLC web site contains 2014-2018 ARC-CO payment rates, as well as a
variety of other farm program data and information for all crops. The web site can be found at:
http://www.fsa.usda.gov/programs-and-services/arcplc_program/

 Kansas State University also has some very good interactive maps for 2018 ARC-CO
payments, as well as historical ARC-CO payment data, available on their “Farm Manager”
web site at: http://www.agmanager.info/ag-policy/arc-co-historical-payment-maps

(NOTE --- A listing of counties receiving 2018 corn and soybean ARC-CO payments in
Minnesota, Northern Iowa, Eastern North and South Dakota is attached.)

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Note --- For additional information contact Kent Thiesse, Farm Management Analyst and Senior
Vice President, MinnStar Bank, Lake Crystal, MN. (Phone --- (507) 381-7960);
E-mail --- kent.thiesse@minnstarbank.com) Web Site --- http://www.minnstarbank.com/
 2018 FINAL CORN ARC-CO PAYMENTS
for Minnesota, Northern Iowa, Eastern North and South Dakota
(All payments listed are per Corn Base acre.)

Minnesota _Iowa_
Brown Co. = $19 Clay Co. = $35
Faribault Co. = $36 Dickinson Co. = $10
Jackson Co. = $7 Emmet Co. = $45
Martin Co. = $49 Humboldt Co. = $20
Redwood Co. = $2.50 Palo Alto Co. = $25
Watonwan Co. = $57 (*)
(*) Maximum 2018 payment level.

All other counties in Minnesota, Northern Iowa, Eastern North and South Dakota
will not receive a 2018 Corn ARC-CO payment.

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2018 FINAL SOYBEAN ARC-CO PAYMENT

for Minnesota, Northern Iowa, Eastern North and South Dakota
(All payments listed are per Soybean Base acre.)

Jackson (MN) = $12 Cerro Gordo Co. (IA) = $11.50

Kittson Co. (MN) = $8
Martin Co. (MN = $38
Nobles Co. (MN) = $5.50
Watonwan Co. (MN) = $18
Eddy Co. (ND) = $24 (*)
Pembina Co. (ND) = $ 8
Towner Co. (ND) = $8
Wells Co. (ND) = $15
Lincoln Co. (SD) = $12
(*) Maximum 2018 payment level.
Clay Co. (IA) = $5
Dickinson Co. (IA) = $5
Emmet Co. (IA) = $38 (*)
Floyd Co. (IA) = $5
Hancock Co. (IA) = $11.50
Humboldt Co. (IA) = $12
Palo Alto Co. (IA) = $32 (*)
Pocahontas Co. (IA) = $18
Winnebago Co. (IA) = $11.50

All other counties in Minnesota, Northern Iowa, Eastern North and South Dakota
will not receive a 2018 Soybean ARC-CO payment.

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NOTES:
* The Listed ARC-CO payments are based on the final 2018 FSA county yields, and the final 2018
MYA prices of $3.61/Bu. for corn and $8.48/Bu. for soybeans.
* All 2018 ARC-CO payments will be paid in October, 2019.
* All listed 2018 ARC-CO payments are factored by the 6.8 % Federal sequestration reduction.

*** Table prepared by Kent Thiesse, Farm Management Analyst ***