There has finally been some movement on potential approval of a long-awaited new Farm Bill. In mid-May, U.S. House Agriculture Committee Chairman, Congressman Glenn (GT) Thompson (R-PA) released the text for the initial version of the U.S. House Farm Bill, which is titled: “Farm, Food and National Security Act of 2024”. The version of the House Farm Bill has generally been viewed as “farmer-friendly” by some ag policy analysts; however, there have been negative reviews from some members of Congress and by some organizations. The entire U.S. House Agriculture Committee approved the initial House Farm Bill on May 24; however, only 4 Democratic members on the committee supported the House Farm Bill. The U.S. Senate Agriculture Committee has also released some initial provisions likely to be included in the Farm Bill.    
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The 2023 crop year was set to be the final year for the 2018 Farm Bill; however, the Farm Bill was extended for the 2024 federal fiscal year and is now set to expire on September 30, 2024. Farm Bills are one of the most comprehensive pieces of legislation that are passed by Congress, with programs ranging from farm commodity programs to food and nutrition programs, from conservation programs to rural development programs, and several more. In many cases, finalizing a Farm Bill can be quite controversial, both along political party lines and geographical differences, with members of Congress wanting to protect the farm, food, conservation, and economic interests of their State.
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Following are some initial details for commodity programs and crop insurance from the new Farm Bill proposal that was passed by the U.S. House Ag Committee:
– Increases the “statutory reference prices” (SRP) for all commodities by 10 to 20 percent. The SRP sets the minimum reference price for farm program commodities that is used to calculate price loss coverage (PLC) and ag risk coverage (ARC) program payments. It would increase the statutory reference price for corn to $4.10/bu., soybeans to $10.00/bu., and wheat to $6.35/bu.
– The formula to calculate the “effective reference price (ERP) would be continued in the next Farm Bill. The ERP is calculated by taking 85 percent of the national market year average (MYA) price of the five years previous to the year preceding the current program year, dropping the high and low price, and averaging the other three years. The final ERP each year is the higher of the calculated price and the statutory reference price.
– Increases the ARC guarantee to 90 percent of the benchmark revenue (currently 86 percent) for both the county-yield based ARC-CO program and the individual yield based ARC-IC program. It would also increase the maximum ARC payment to 12.5 percent of the ARC revenue (currently 10 percent).
– Increases the marketing assistance loan (MAL) rates for most commodities.
– Provides an opportunity to add new crop base acres for farms that currently have no base acres or that have been planted to more acres of program crops than the existing base acres. This provision would not affect existing crop base acres but would be in addition to those base acres.
– Would increase the farm program payment limit to $155,000 for any eligible individual earning at least 75 percent of their income from farming (currently at $125,000) and this payment limit would be indexed to inflation going forward. Would also adjust payment limit language to be comparable for farm LLC business structures as currently exists for farm general partnerships.
– Would increase the supplemental crop option (SCO) crop insurance coverage up to 90 percent of the county yield times the spring crop insurance price (currently the SCO coverage is at 86 percent). The cost of SCO coverage would be subsidized by the federal government at 80% (currently 65%).
– Would also enhance “whole-farm” revenue protection crop insurance products and provide added crop insurance options for specialty crops.
Initial U.S. Senate Farm Bill proposals for the commodity and crop insurance titles …...
Senator Debbie Stabenow (D-MI), Chair of the U.S. Senate Agriculture Committee, has not released the official text for the Senate Farm Bill; however, some initial likely provisions have been released. Here are some of those likely commodity and crop insurance title provisions from the Senate Farm Bill proposal:
– Maintains the current PLC and ARC program choice for eligible commodities and keeps the formula for payment acres the same as the current Farm Bill.
– Increases the minimum statutory reference prices (SRP’s) for all farm program commodities by 5 percent and continues the formula for calculating the effective reference prices (ERP).
– Would establish a maximum PLC payment rate at 20 percent of the reference price for a commodity. Currently the maximum PLC payment rate is the difference between the reference price and the marketing loan rate for that commodity. For example …… the 2024 corn reference price is $4.01 per bushel and national corn loan rate is $2.20 per bushel, so the maximum PLC protection is $1.81 per bushel; however, under the proposed Farm Bill the maximum would be reduced to $.80 per bushel.
– Increases the ARC program guarantee to 88 percent of the benchmark guarantee (currently 86%) but would continue the maximum ARC payment at 10 percent of the benchmark guarantee.
– Provides limited opportunity for underserved farmers to update crop base acres and establish farm program yields. This would differ from the broader base acre update proposal in the House Farm Bill,
– Marketing assistance loan (MAL) rates for eligible commodities would be indexed to the USDA Economic Research Service (ERS) five-year cost of production for a given commodity.
– Would restrict commodity program payments from being made on land owned by individuals or legal entities with an adjusted gross income (AGI) exceeding $700,000. If is not clear how this might impact farm program eligibility for farm operators that rent farm land from individuals exceeding that limit.
– Enhances crop insurance premium subsidies for beginning farmers in their first ten years of farming.
– Increases the SCO crop insurance coverage to 88 percent (currently 86%), similar to maximum ARC farm program coverage and expands SCO coverage to more crops. The SCO federal premium subsidy would increase to 80 percent of the insurance premium (currently at 65 percent).
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As can be seen, there are some differences in the commodity and crop insurance proposals in the U.S. House and Senate versions of a new Farm Bill; however, most of those differences could likely be worked out through the conference committee process. The Senate Farm Bill would greatly expand many of the programs in the conservation title of the Farm Bill and links many of those programs to the so-called “climate-smart” agricultural practices that have been identified through the climate programs that are being initiated through the climate funding in the Inflation Reduction Act (IRA) that was passed in 2023. The Senate Farm Bill also would not place any restrictions on eligibility for SNAP and other programs under the nutrition title of the Farm Bill, while the House Farm Bill would place some restrictions on certain aspects of these programs. The biggest difference may likely come down to how the funding is allocated in the Farm Bill. The proposed House Farm Bill would significantly increase spending for commodity programs and crop insurance, while the Senate Farm Bill would likely add more spending to the conservation and nutrition titles of the Farm Bill.
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The initial release of some details for the new Farm Bill and the action by the U.S. House Agriculture Committee has provided some optimism regarding the completion of a Farm Bill by the end of 2024; however, many steps remain to complete that process. Once a Farm Bill is approved by both houses of Congress, a conference committee will need to work differences in the House and Senate versions of the Farm Bill and have it re-approved in both houses of Congress, before ultimately sending it to the President for final approval. This will likely need to happen by the end of 2024 or very early in 2025 to make it possible for the new legislation to be implemented for the 2025 crop year. Ultimately, a compromise will likely be reached and a new 5-year Farm Bill will be passed; however, given the political division that currently exists in Congress, this may be difficult to accomplish in 2024. As a result, another one-year extension of the current Farm Bill for 2025 is certainly a possibility.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions
Phone - (507) 381-7960;  E-mail - [email protected] ​

​The University of Minnesota recently reported that the average net farm income for Southern and West Central Minnesota farmers in 2023 was $76,181, which was a sharp decline from the 2022 average net farm income of $311,240. The 2022 net farm income was the highest average net farm income ever recorded in the FBM Summary. The 2023 average net farm income was at the lowest level since 2018 and followed three years (2020-2022) of very strong net farm income levels in the region. The reduction in net farm income levels in Southern and West Central Minnesota were largely driven by reduced crop profits that resulted from much lower grain market prices than 2021 and 2022, along with reduced crop yields in some locations. Livestock profit margins in 2023 in Southern Minnesota were mixed, showing strong profits in beef production but very modest or negative profit margins in dairy and hogs. 
 
The Farm Business Management (FBM) Summary for Southern and West Central Minnesota is prepared by the Farm Business Management Instructors. This summary includes an analysis of the farm business records from farm businesses of all types and sizes in Southern and Western Minnesota. This annual farm business summary is probably one of the “best gauges” of the profitability and financial health of farm businesses in the region on an annual basis. Following are some of the key points from the data in the 2023 FBM Summary:
 
BACKGROUND  DATA
·      The “Net Farm Income” is the return to labor and management, after crop and livestock inventory adjustments, capital adjustments, depreciation, etc. have been accounted for. This is the amount that remains for family living, non-farm capital purchases, income tax payments, and for principal payments on farm real estate and term loans. The average net farm income in 2023 was +$76,181.
·      The “median” net farm income is the midpoint net farm income of all farm operations included in the FBM Summary, meaning that half of the farms have a higher net farm income and half have a lower net income. The average median net farm income in 2023 was only +$40,039.
·      A total of 1,590 farms from throughout South Central, Southwest, Southeast, and West Central Minnesota were included in the 2023 FBM Summary. The average farm size was 687 crop acres. The top 20 percent net income farms averaged 1,188 acres, while the bottom 20 percent net income farms had 845 acres.
·      62 percent of the farm operations were cash crop farms and 12 percent were single entity livestock operations,
      with the balance of farms being various combinations of crop, livestock, and other enterprises.                                                                    
·      883 farms (55%) were under $500,000 in gross farm sales in 2023; 354 farms (22%) were between $500,000 and $1 million in gross sales; 263 (17%) were between $1 million and $2 million in gross sales; and 89 farms (6%) were above $2 million in gross sales.
·      In 2023, the average farm business received only $624 in crop-related government program payments. Livestock-related government payments averaged $9,193, which was largely due to very large Dairy Margin Coverage (DMC) program payments to dairy producers. CRP and conservation payments averaged $1,932. The average level of government payments received by farm businesses has been greatly reduced in recent years compared to levels from 2018-2020.
·      The average family living expense in 2023 was $78,182, which increased slightly compared to recent years. The average non-farm income in 2023 was $47,214, which represents about 32 percent of total annual non-farm expenses ($151,739) by families for family living and other uses.
·      In 2023, the average farm business spent $1,298,802 for farm business operating expenses, capital purchases, and non-farm expenses. The total dollars spent by the 1,590 FBM farm families was nearly $2.1 billion. Most of this money was spent in local communities across the region, helping support the area’s overall economy.
 
 
FARM  FINANCIAL  ANALYSIS
·      The average net farm income for Southern and West Central Minnesota for 2023 was $76,181, while the median net farm income for the region was $40,039. This compares to median net farm income levels of $177,614 in 2022, $176,426 in 2021, $102,848 in 2020, $36,547 in 2019, and $20,655 in 2018.
 
·      As usual, there was large variation in median farm income in 2023. The top 20 percent profitability farms averaging a median net farm income of +$288,243, which was down from +$728,237 in 2022. The low 20 percent profitability farms with an average median net farm income of negative ($96,605), down from +$13,238 in 2022.
 
·      The variation in median net farm income in 2023 also showed some differences based on the gross receipts of the farms. Farms with $1.5 to $2 million in gross receipts had a median net farm income of +$107,644, compared to +$135,680 for farms with a gross of $1 to $1.5 million, +$63,356 for farms with a gross of $500,000 to $1 million, +$38,319 for farms with a gross of $250,000 to $500,000, and +$26,235 for farms with a gross of $100,000 to $250,000. Interestingly, when you look at the profit margin, the smaller volume income groups actually had a higher margin. The $100,000 to $250,000 group was at 31.4% profit margin, the $250,000 to $500,000 group at 26.1%, the $500,000 to $1 million group at 14.5%, the $1 to $1.5 million group at 16.2%, and the $1.5 to $2 million group at 14.2% profit margin.
 
·      The average farm business showed working capital of +$469,185 in 2023, which is down 22 percent from 2022 levels but is still 2.5 times higher than the average working capital in 2019. The current ratio (current assets divided by current expenses) for 2023 was 231%, which compares to 283% in 2022, 247% in 2021, 198% in 2020, and 156% in 2019. The working capital to gross revenue ratio for 2023 was 44.5%, which is still at a very strong level compared to the much more challenging levels in 2018 and 2019.
 
·      Another measure of the “financial health” of a farm operation is the “term debt coverage ratio”, which measures the ability of farm operations to generate adequate net farm income to cover the principal and interest payments on existing real estate and term loans. If that ratio falls below 100%, it results in the farm business being required to use working capital or non-farm income sources to cover the difference. The average term debt coverage ratio for 2023 dropped considerably to a level of 125%, which was the lowest since 2018. This compares to average ratios of 372% in 2022, 389% in 2021, 274% in 2020, and 148% in 2019. The bottom 40 percent profitability farms had an average term debt coverage ratio below 100% in 2023.
 
·      The overall solvency of the 1,590 farm businesses in the FBM program have remained fairly stable in recent years. The average debt/asset ratio in 2023 was 43%, which was has been nearly steady for the past four years. The debt/asset ratio for the lowest 20 percent profit farms was 49% and was 38% for the 20 percent highest profit farms. The average farm listed just over $3 million in total farm assets, just over $1.14 million in farm liabilities, for an average farm net worth of approximately $1.8 million.
 
BOTTOM  LINE
Overall, net returns from crop operations in 2023 were down considerably from the very strong farm profit levels in 2022 and 2021. As usual, there was a wide variation in farm profit levels from the top one-third of net farm income operations as compared to other farms. The overall average financial health of most farm businesses remains quite solid due to strong working capital and cash surpluses from 2021 and 2022. The reduced net farm income levels in 2023 point to some “caution flags” on the horizon for farm profitability. These include rapidly continued high input expenses and land costs, continued sluggish grain prices, and inconsistent livestock profitability. Complete farm business management results are available through the University of Minnesota Center for Farm Management FINBIN Program at:  https://finbin.umn.edu/
 

Note --- For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions
              Phone --- (507) 381-7960;  E-mail --- [email protected] 

​The USDA World Agricultural Supply and Demand Estimates (WASDE) Report released on May 10 projected strong production levels in 2024 and a likely increase in corn and soybean ending stocks by the end the 2024-25 marketing year on August 31, 2025. U.S. wheat stocks are also expected to increase in the coming year. From a grain marketing standpoint, the initial reaction to the WASDE report was positive for corn and soybeans in the short-term; however, USDA is projecting that the national average grain prices for corn, soybeans, and wheat will all decline by the conclusion of the 2024-25 marketing year, compared to 2023-24 price levels. Following are some highlights of the latest USDA WASDE Report:
 
Corn:
Based on the May 10 USDA WASDE Report, the projected corn ending stocks for the 2023-24 marketing year are estimated at 2.022 billion bushels, which is a decrease of 100 million bushels from the April Report, due to expected increases in both corn exports and corn used for ethanol production of 50 million bushels each. The anticipated 2023-24 corn ending stocks still represent a substantial increase from 1.36 billion bushels in 2022-23, 1.38 billion bushels in 2021-22 and 1.23 billion bushels in 2020-21. USDA is projecting that total U.S. corn usage for 2023-2024 at just over 14.7 billion bushels for livestock feed, ethanol, exports, etc., which is an increase of 7.2 percent or 1 billion bushels compared to the 2022-23 usage level. The higher estimated corn usage was mainly due to increases in the estimated amount of corn used for feed, ethanol production, and exports in 2023-24, compared to a year earlier. The 2023-24 corn stock-to-use ratio is now estimated at 13.7 percent, up from 9.9 percent in 2022-23 and 9.2 percent in 2021-22. 
 
The May WASDE Report also offered an initial USDA estimate for corn carryover levels in the 2024-25 marketing year, which ends on August 31, 2025. The corn ending stocks were estimated at 2.1 billion bushels, which would be an increase of about 100 million bushels compared to the end of the 2023-24 marketing year. The 2024-25 stocks-to-use ratio is expected to increase to 14.2 percent.  The projected 2024-25 the carryout level would be the highest since the end of the 2016-17 and the ending stocks were near the average grain-trade estimates. USDA is estimating the total corn supply for 2024-25 at 16.9 billion bushels and the total corn usage for the year at 14.8 billion bushels. USDA is forecasting a slight increase in corn usage for livestock feed and higher U.S. corn export levels, as well as stable corn usage for ethanol production in 2024-25. 
 
USDA is estimating total U.S. corn production in 2024 at 14.86 billion bushels, which would be down 3.1 percent from the record 2023 U.S. corn production of 15.34 billion bushels. The USDA Report expects an estimated 90 million acres of corn to be planted in the U.S. in 2024, which compares to 94.6 million acres in 2023 and 88.2 million acres in 2022.  USDA is projecting the average U.S. corn yield at 181 bushels per acre in 2024, which is up from the record average yield of 177.3 bushels per acre in 2023, as well as the 2022 yield of 173.4 bushels per acre. The WASDE corn yield estimate is very close to the trend line corn yield forecast at the USDA Ag Outlook Conference in February this year. Corn planting progress in 2024 has been running near normal in many areas of the central and northern Corn Belt of the U.S., but is behind normal in some areas of the eastern Corn Belt.
 
As of May 10, USDA is estimating the average U.S “on-farm” corn price for the 2023-24 marketing at $4.65 per bushel, which was down $.05 per bushel from the April estimate. The current USDA projected corn price compares to recent final national average prices of $6.54 per bushel for 2022-23, $6.00 per bushel for 2021-22, $4.53 per bushel for 2020-21, and $3.56 per bushel for 2019-20. USDA also released the first estimated average corn price for the 2024-25 marketing year at $4.40 per bushel, which would be $2.14 per bushel lower than the final 2022-23 national average price, which represents a decline of 33 percent in two years.   
Soybeans:
Based on the May 10 WASDE Report, the projected soybean ending stocks for 2023-24 are estimated at 340 million bushels, which is the same as the April estimate and was close to the average grain trade estimates. The projected 2023-24 soybean ending stocks have widened a bit compared to other recent soybean carryover levels of 264 million bushels in 2022-23, 274 million bushels in 2021-22, and 257 million bushels in 2020-21. The projected ending stocks are still well below 525 million bushels in 2019-20 and 909 million bushels in 2018-19.
 
Total soybean usage for 2023-24 is estimated to be just over 4.11 billion bushels, which is down slightly from the total usage of 4.30 billion bushels in 2022-23. Soybean export levels for 2023-24 are projected to decrease by 292 million bushels compared to a year earlier. USDA projected a slight increase in bushels used for soybean processing in the U.S for 2023-24 compared to crush levels a year earlier. Some analysts feel that domestic soybean demand may increase in the next few years with several new or expanded soybean processing plants scheduled to come on board, focusing on the production of renewable diesel.
 
The May WASDE Report projects soybean ending stocks to increase by 105 million bushels to 445 million bushels by the end of the 2024-25 marketing year on August 31, 2025. USDA is estimating the total U.S. soybean supply to increase by 285 million bushels in 2024-25; while the total soybean usage is expected to increase by 246 million bushels compared to levels for 2023-24. The projected ending stocks-to-use ratio for 2024-25 is estimated at 10.2 percent, which compares to 8.2 percent in 2023-24 and 6.1 percent in 2022-23.
 
Total U.S. soybean production in 2024 is estimated at 4.45 billion bushels, which would be an increase from the estimated U.S. soybean production of 4.16 billion bushels in 2023 and 4.27 billion bushels in 2022. Interestingly, a year ago in May USDA projected the 2023 U.S. soybean production at 4.51 billion bushels and the actual 2023 production was 345 million bushels less. Planted soybean acres for 2024 are projected at 86.5 million acres, which is up from 83.6 million acres in 2023, but lower than 87.5 million acres in 2021. USDA is estimating a national average soybean yield of 52 bushels per acre in 2024, which compares to 50.6 bushels per acre in 2023 and 49.6 bushels per acre in 2022. The record U.S. soybean yield was 52.1 bushels per acre in 2016. 
 
USDA is estimating the U.S “on-farm” soybean average price at $11.20 per bushel for the 2024-25 marketing year, which runs from September 1, 2024 to August 31, 2025. The preliminary price estimate for the 2024-25 marketing year would represent a 21 percent decline or $3.00 per bushel from the market year average price on May 1st two years ago. The projected final market year average price for 2023-24 is $12.55 per bushel soybean price, which compares to final average soybean prices of $14.20 per bushel in 2022-23, $13.30 per bushel for 2021-22, and $10.80 per bushel for 2020-21, and $8.57 per bushel for 2019-20. The average soybean prices for 2024-25 will likely be highly dependent on 2024 soybean production in the U.S. and South America, as well as increases in soybean crush levels and the amount of U.S. soybean exports to China and other countries.
 
Wheat:
The May 10 WASDE Report projected U.S. wheat ending stocks to increase by 78 million bushels to 766 million bushels by the end of the 2024-25 marketing year on May 31, 2025. This compares to estimated ending stocks of 688 million bushels for 2023-24 and 570 million bushels in 2022-23. Wheat demand in 2024-25 is projected to increase slightly from the current year demand up to 1.9 billion bushels, with the increase mainly due to higher export estimates. Wheat acreage in 2024 is expected to decrease to 47.5 million acres; however, total U.S. wheat production is expected to increase slightly in 2024 to 1.86 billion bushels. Wheat acreage and production numbers could be adjusted in coming months, depending on planting conditions in the primary spring wheat production region. USDA is projecting the average “on-farm” wheat price at $6.00 per bushel for 2024-25 and $7.10 per bushel for 2023-24, which compares to other recent final national average price of $8.83 in 2022-23, $7.63 per bushel in 2021-22 and $5.05 per bushel in 2020-21. 
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions
Phone - (507) 381-7960;  E-mail - [email protected] 

​Spring fieldwork got off to a good start in many portions of the Upper Midwest in mid-April; however, conditions have been much different in late April and early May. Frequent rainfall events and above normal precipitation have kept most farmers out of the field since late April. In some areas, it may take several drier days in order to return to full-scale fieldwork, and the resulting soil conditions may be less conducive for good planting conditions. In addition, except for a few brief stints of some warmer temperatures, very cool and cloudy weather conditions have existed throughout the region in the past couple of weeks. This has slowed germination and emergence of the corn and soybeans that were planted prior to the prolonged rainfall events. Some standing water and flooding has occurred in areas that have received high amounts of rainfall and near small rivers and streams. This may require replanting of crops in some of these areas.
 
Some portions of the Upper Midwest had very good corn and soybean planting progress in mid-April. Farmers in some areas were able to take advantage of some brief planting windows that existed from April 12-15 and again from April 21-25. As a result, portions of the region, such as South Central and Southwest Minnesota and Northern Iowa, have 80-90 percent of the corn and 30-40 percent of the soybeans planted, while other areas of the region have very little crop planted. Normally by early May, Midwest farmers have made some significant planting progress on Spring fieldwork. For farm operators that were able to plant some corn during April, there has been some concern about the seedling viability of that corn due to the extended period cool and damp soil conditions that has existed across the region. The good news is that the weather forecast for mid- May appears to be much more favorable for corn and soybean development in most areas of the Upper Midwest.
 
The USDA Weekly Planting Progress Report released on April 29 indicated that 27 percent of the intended U.S. corn acreage for 2024 was planted by that date. This compares to the 5-year average of 22 percent of the corn planted by that date. As of April 29, Minnesota had 30 percent of the corn planted, compared to a 5-year average of 18 percent, while Iowa had 39 percent planted, compared to a 5-year average of 28 percent planted.  Other States that were ahead of the 5-year average in corn planting progress on April 29 included Missouri at 63 percent, South Dakota at 13 percent, Wisconsin at 10 percent, and North Dakota at 6 percent. Illinois and Nebraska were both near the 5-year average for corn planting progress at 25 percent and 22 percent, while Indiana and Ohio were behind the normal pace for corn planting with less than 10 percent planted in both States. As of April 29, 18 percent of the U.S. soybeans had been planted, compared to the 5-year average of 10 percent planted by that date. 
 
One piece of good news for farm operators in many portions of the Upper Midwest is that recent rainfall events have helped ease drought concern for the early portions on the 2024 growing season. Many areas of the primary corn and soybean production areas in the Upper Midwest were listed as “abnormally dry” to “severe drought” in the weekly U.S. Drought Monitor entering the month of April. However, frequent rainfall events and above normal precipitation during April have either eliminated or greatly shrunk to drought concern area in the weekly update. There should now be adequate soil moisture this year for good corn and soybean germination and early season plant growth in most areas of the Upper Midwest. In addition, the amount of stored soil moisture in the top 5 feet of soil has now been restored to much improved levels, compared to the soil moisture conditions that existed after harvest in 2023 and in early Spring this year.
 
The University of Minnesota Research and Outreach Center at Waseca, Minnesota, recorded 4.53 inches of rainfall during April, which was 1.23 inches above normal, and has recorded over two inches of additional precipitation during the first few days of May. This followed several months of below normal precipitation at the Waseca site. The total precipitation for 2024 at the Waseca site is now near normal. The good news is that most rainfall events were not extreme and have left the soil conditions very favorable for early season plant growth.
 
Soil temperatures at the Waseca site were well above normal in mid-April; however, have dropped below normal by early May. The average soil temperature at the 2-4 inch level on April 15 at the Waseca research location was above 55 degrees Fahrenheit (F), which is almost ideal for good corn and soybean planting conditions. After briefly dropping below 50 degrees F, the average soil temperatures have remained in the 50-55 degree F range during most of late April and early May. Research has shown that 50 percent corn emergence will occur in 20 days at an average soil temperature of 50 degrees F, which is reduced to only 10 days at an average temperature of 60 degrees F. This may help explain why some of the corn that was planted 2-3 weeks ago has been quite slow to emerge. The good news is that temperatures are predicted to get warmer in the next couple of weeks.
 
Even though planting dates have been delayed in many areas of the Upper Midwest, most University and private agronomists are encouraging producers to be patient with initiating field work, and to wait until soil conditions are fit for good corn planting and seed germination. Given the high cost per acre of seed corn, and the limited availability of some of the best yielding corn hybrids in 2024, most growers do not want to take the risk of planting corn into poor soil conditions. Normally, in mid-May, the soil temperatures warm up quite rapidly, so concern over cool soil temperatures becomes less of an issue. It is expected that full-scale corn and soybean planting will resume as soon as the field conditions dry out and are fit for planting.
 
Timely corn planting in the Upper Midwest is usually one of the key factors to achieving optimum corn yields in a given year. According to research at land-grant universities and by private seed companies, the “ideal time window” to plant corn in Upper Midwest in order to achieve optimum yields, if soil conditions are fit for planting, is typically from about April 15 to May 10. Based on long-term research, the reduction in optimum corn yield potential with planting dates from May 10-15 in many areas of the region is usually very minimal and is quite dependent on the growing season weather that follows. Even corn planted from May 15-25 has a good chance of producing 90-95 percent of optimum yield potential, assuming that there are favorable growing conditions following planting. The ideal window to plant soybeans in the Upper Midwest and to still achieve optimum yields starts in late April and extends until mid-May or even beyond in some years, so there is still ample time to get the 2024 soybean crop planted.
 
Even though corn planting is off to very slow start in some areas in 2024, compared to other years, the good news is that there are still opportunities for timely planting and close to optimal yields. In both 2022 and 2023, a large amount of corn in the Upper Midwest was planted in mid-to-late May. Minnesota achieved a record state average corn yield of 195 bushels per acre in 2022 and ended with a statewide yield of 185 bushel per acre in 2023, which probably would have been higher had it not been for drought conditions late in the growing season in portions of the State.  On the other hand, the corn planting dates were also delayed in the 2019 crop year in many portions of Minnesota, when the statewide average corn yield was only 173 bushels per acre, which was the lowest statewide corn yield in recent years. The biggest difference in those years was that the growing conditions after planting in 2022 and 2023 were almost ideal in many areas from late May until early July.  By comparison, the 2019 corn crop was planted late into poor soil conditions, which was followed by less-than-ideal conditions throughout much of the growing season. 
 
Most farm operators in the Upper Midwest will likely not switch intended 2024 corn acres to soybeans unless the corn planting dates get extended into late May or beyond. By April, producers have typically finalized decisions for seed, fertilizer, and other crop inputs for the growing season, so they are likely to continue with their planned crop rotations as long as possible. In addition, there is not currently a big advantage in the projected market price at harvest this year for either corn or soybeans. New crop corn and soybean prices for the Fall of 2024 have remained fairly low in recent months due to weaker than expected demand and export volume, together with USDA projecting increases in corn and soybean inventories by the end of 2024.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions
Phone - (507) 381-7960;  E-mail - [email protected] 

​Many crop producers in the Midwest were enrolled in the Ag Risk Coverage (ARC-CO) farm program choice on their corn and soybean base acres for the 2023 crop year. With the advent of much lower corn and soybean market prices since the 2023 harvest season, many farmers are now wondering if there will be any 2023 ARC-CO payments for corn and soybeans for the 2023 crop year. Producers have a farm program choice each year on all eligible crops between the Ag Risk Coverage (ARC) and Price Loss Coverage (PLC) farm program choices. Any potential ARC-CO or PLC payments for the 2023 crop year would be paid to producers in October of 2024.
 
The PLC program payments are “price-only” and are based on comparing the 12-month national market-year average (MYA) price for a given crop compared to the established reference price for that year. If the 12-month average price is lower than the reference price, the producer would earn a PLC payment for that year. Enrollment in the PLC program has been fairly low in recent years due to corn and soybean commodity prices that have been well above the established PLC reference prices.
 
The ARC-CO farm program choice includes a formula that uses 5-year average county-based yield calculations and 5-year average MYA prices to establish a benchmark revenue for the farm. The final calculated revenue for the farm is the actual county yield for a given year times the final MYA price for the year. If the final calculated revenue is lower than 86 percent of the benchmark revenue for the year there would be an ARC-CO payment for that year. There is also an “ARC-IC” farm program choice, which is based on farm-level yields; however, in many instances the ARC-IC program has less payment potential than the ARC-CO program.
 
Many times understanding the formula for the ARC-CO programs can be a bit confusing. Sometimes it can be easier to understand by reviewing the data and results for the ARC-CO program from previous years. For information on current and past benchmark yields, prices and revenues, historical ARC-CO payment levels, and other farm program information, producers should access the USDA ARC-PLC web site, which is at:  www.fsa.usda.gov/arc-plc
 
The 2023 corn and soybean yields in many portions of the Midwest ended up better than expected, considering the very dry weather that existed in many areas during much of the growing season. In the areas that had final 2023 county average yields that were near or above the established 2023 county benchmark yield for the county, there will likely be very little chance of receiving any 2023 ARC-CO payment this Fall. However, in portions of the region that had final county yields that were well below average, there could be some possibility for a small ARC-CO payment. The 2023 county yield data for all crops in every State is available on the USDA National Agricultural Statistics Service (NASS) web site at:  http://www.nass.usda.gov/.
 
The market year average (MYA) price for corn and soybeans is 12-month national average price in a given year from September 1st during the year of harvest until August 31st the following year, which is then finalized on September 30th in the year following the production year for the crops. This is why any farm program payments that are earned for a given crop year are not paid by USDA until after October 1st in the following year. The marketing year to calculate MYA prices for wheat and other small grain crops is from June 1st in the year of harvest until May 31st the following year. The 12-month national average MYA price for a given crop is based on the monthly average market price received by farm operators across the United States, which is then “weighted” at the end of the year, based on the volume of bushels sold in each month. The USDA MYA price estimates can be tracked on a monthly basis in the monthly USDA World Agricultural Supply and Demand Estimates (WASDE) reports. The next WASDE report will be released on May 10.
Following is a brief summary of potential 2023 farm program payments for each crop:

• Corn
  • PLC Program --- The 2023 corn reference price was $3.70 per bushel and the estimated 2023 corn MYA price (as of 4-01-24) is $4.70 per bushel. Since the 12-month marketing year is already beyond the hallway-point, there will likely not be any 2023 PLC payments for corn. There were significant PLC payments for corn from 2015-2019; however, there have been no PLC payments since 2019.
  • ARC-CO Program --- The 2023 corn benchmark price that was used to calculate the 2023 benchmark revenue for all counties was $3.98 per bushel. The estimated corn MYA price (as of 4-01-24) is $4.70 per bushel, which is 18 percent above the benchmark price. When factoring in the required 86 percent of county revenue to earn ARC-CO payments, it would require the final 2023 county average corn yield to be approximately 27 percent or more below the 2023 county benchmark yield in order to earn a 2023 ARC-CO payment.

 

•      Soybeans
  • PLC Program --- The 2023 soybean reference price was $8.40 per bushel and the estimated 2023 soybean MYA price (as of 4-01-24) is $12.55 per bushel, which is why there is no chance for 2023 PLC payments for soybeans. There have never been any PLC program payments for soybeans since the PLC program was initiated in 2014.
  • ARC-CO Program --- The 2023 soybean benchmark price that was used to calculate the 2023 benchmark revenue for counties was $9.57 per bushel. The estimated corn MYA price (as of 4-01-24) is $12.55 per bushel, which is 32 percent above the benchmark price. When factoring in the required 86 percent of county revenue to earn ARC-CO payments, it would require the final 2023 county average soybean yield to be approximately 35 percent or more below the 2023 county benchmark yield in order to earn a 2023 ARC-CO payment.

 

•       Wheat
  • PLC Program --- The 2023 wheat reference price was $5.50 per bushel and the estimated 2023 wheat MYA price (as of 4-01-24) is $7.10 per bushel, meaning that there will be no 2023 PLC payments.
  •  ARC-CO Program --- The 2023 wheat benchmark price that was used to calculate the 2023 benchmark revenue for counties was also $5.50 per bushel. The estimated MYA price (as of 4-01-24) is $7.10 per bushel, which is 29 percent above the benchmark price. When factoring in the required 86 percent of county revenue to earn ARC-CO payments, it would require the final 2023 county average wheat yield to be approximately 34 percent or more below the 2023 county benchmark yield in order to earn a 2023 ARC-CO payment.

 
In summary, unless a producer was in a county that had greatly reduced yields in 2023 due to drought or other weather issues, it is unlikely that there will be any 2023 ARC-CO payments earned for corn, soybeans or wheat for the 2023 crop year. In addition, there will not be any 2023 PLC payments for any of the three crops. It may be possible that there will be either PLC or ARC-CO payments for other farm program eligible crops.
 
Looking ahead to the 2024 crop year, there could be more potential for farm program payments for corn and soybeans. The 2024 reference prices for potential PLC payments in 2024 increased to $4.01 per bushel for corn and $9.26 per bushel for soybeans. The 2024 benchmark prices for ARC-CO payments increased to $4.85 per bushel for corn and $11.12 per bushel for soybeans. If current price trends continue past the 2014 harvest season into to 2025, there will be an increased likelihood for corn and soybean ARC-CO payments, especially in any counties that have reduced crop yields in 2024. The wheat reference price for 2024 remained at $5.50 per bushel and the 2024 reference price increased to $6.21 per bushel.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions
Phone - (507) 381-7960;  E-mail - [email protected]