Ag producers receiving 2015 Farm Bill payments
By Russ Pankonin
The Wauneta Breeze
Grain producers in Chase County, as well as in Nebraska and throughout the nation, would just as soon see better prices for the crops they grow.
But until that happens, they are getting some relief with Farm Bill payments that have been distributed from Farm Service Agency (FSA) offices.
This month, Chase County producers have received more than $12 million in farm payments, with another $1.2 million for CRP acres. according to Linda Fegler, FSA county executive director in Imperial.
When the last Farm Bill was written in 2014, payments were deferred a year. That was done so the average national market price for the crop year could be used to calculate if payments were to be made, and if so, how much.
As a result, farmers are just getting their payments for the 2015 crop. Payments for the 2016 crop season won’t come until October 2017.
The Farm Bill provided farmers with two options for price protection—Agriculture Risk Coverage-County (ARC-CO) and Price Loss Coverage (PLC).
The ARC-CO program provides revenue loss coverage at the county level.
Payments in the ARC-CO program are issued when the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for that respective county.
The county guarantee formula takes into account the national average market prices and a county’s average yield for the respective commodity.
PLC payments are issued when the national average per bushel market price of a covered commodity falls below the national guaranteed or safety-net price.
The safety-net price is based on the national market year average price for the previous five years.
Fegler said nearly all producers in Chase County chose the ARC-CO program for price protection while very few choose the PLC option.
Farmers only receive payment for 85 percent of their base acres of the crop.
Then, thanks to budget sequester bill passed in 2011 to control federal spending, these payments are reduced another 6.8 percent. Next year, that penalty will increase to 6.9 percent.
In Chase County, the ARC-CO payment for irrigated corn and dryland corn is $82.60 per acre for 2015.
That means that a farmer with 100 base acres of irrigated corn would receive a payment of $6,543.57 for 2015 (100 base acres x 85 percent=85 base acres eligible for payment; 85 acres x $82.60 per acre=$7,021 less sequestration of 6.8 percent=$6,543.57).
These payments vary from county to county based on county yield averages.
Since there is less dryland corn grown in Chase County, that payment is the same as the irrigated rate.
In Perkins, Dundy, Hayes and Hitchcock Counties, dryland corn farmers will not receive any payments.
Teri Moss, the CED in Perkins County, said the price guarantee for dryland was hurt due to yield declines in 2012, 2013 and 2014 due to the drought.
That’s made a lot of dryland corn producers there unhappy, she said.
The ACR-CO payment for wheat in Chase County was set at $50.92 per acre for irrigated wheat and $29.48 for dryland wheat.
Per-acre payments for soybean production in Chase County was set at $70.45 with grain sorghum at $31.11.
Payments for wheat under PLC coverage are $0.61 per bushel nationally while corn is $0.09 per bushel. There was no PLC payment for soybeans because of a stronger market.
Crucial time for payments
Despite being a year in arrears, the current payments come at a crucial time for grain producers.
With prices continuing to fall below the cost of production, the payments will be welcome additions to farmers’ cash flow positions.
The fear for farmers and lenders is whether the influx of payments will be enough to offset the losses being suffered this year.
Both farmers and lenders will likely be facing some tough decisions when it comes time to renew operating notes and financing for next year.
As one area banker noted, what farmers need most right now is a rally in the markets.
As of Tuesday, cash price for corn at Frenchman Valley in Wauneta was $3.01. Cash price for wheat stood at $2.81 per bushel.