Very Few 2023 Farm Program Payments Likely

​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]