An Early Jump on Computing ARC-CO Payments

ifr151204–153
An Early Jump on Computing ARC-CO Payments
Gary Schnitkey, Agricultural Economist - University of Illinois
FarmDocDaily Source Article

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Farmers and their bankers can get a jump on just how much income to expect from the ARC County program next fall. Todd Gleason has more on how NASS county yields can be used to anticipate the payments.

Farm income is down dramatically…
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Farm income is down dramatically. It means farmers will be going to bankers for production loans this winter. Those loans will be used to plant next season’s crops. The bankers will be looking for every clue they can to help them make solid lending decisions. One source of income they’ll want to calculate comes from the farm programs. However, the ARC County payments won’t be figured until the fall. It is possible to estimate these payments by substituting NASS county yields for the FSA computed yields says University of Illinois Agricultural Economist Gary Schnitkey.

Schnitkey :41 …county yields will look like.

Quote Summary - So, there are likely to be 2015 ARC County payments, but this will depend upon county yield levels. FSA calculates those yields, but not until the autumn of 2016. However, we can use NASS yields to come up with a pretty good estimate of the FSA county yields. NASS will release its yields in February of this year. This will give us a pretty good feel for the 2015 ARC County payments because we’ll have a pretty good ideas of what the FSA county yields will look like.

NASS county yields do vary from the FSA numbers, but not by much. NASS calculates yields by dividing production by harvested acres. These are both numbers the agency collects via a statistical estimate. FSA uses a different calculation says Schnitkey.

Schnitkey :12 …will always be less than NASS yields.

Quote Summary - FSA does the same thing when NASS data exists, but it adds to acres the RMA failed acres. So, FSA yields will always be less than NASS yields.

Again, because FSA adds failed acres into the calculation the resulting yields are less than the NASS county yield averages. It means the NASS county yields, again those will be released in February, will provide a conservative estimate of the ARC County payment.

Schnitkey :14 …depends on the number of failed acres.

Quote Summary - If they use the NASS yield they’ll most likely be underestimating the payment because usually FSA yields are bit lower than NASS yields. It depends on the number of failed acres.

Again FSA yields are lower than NASS county yields because production is divided by harvested and failed acres, not just the harvested acreage figure used by NASS. There is an Illinois state map of the average county difference on the FarmDocDaily website.