Cornhusker Economics on Farm Programs, Payments and Prospects

Cornhusker Economics on Farm Programs, Payments and Prospects October 24, 2018

Farm program payments have helped Nebraska crop producers cope with the dramatic drop in prices since 2013 with $500-$600 million-plus in payments received on each of the 2014-2016 crops. But that support, largely in ARC, is quickly disappearing with substantially less than $100 million in projected payments for the 2017-2018 crops, buffered only temporarily by the $300 million-plus in trade assistance payments this fall.

Barring significant market recovery or further trade assistance, producers will be managing for relatively low market prices and relatively little farm program support in 2019.

- Cornhusker Economics (Oct. 24, 2018)

The USDA Farm Service Agency (FSA) began issuing payments to producers in October for Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs for the 2017 crop year. While these farm program payments had provided substantial cash flow to help buffer falling market price and farm income projections in the past three years, the current programs will provide relatively little cash flow for now and for the coming year. Only the ad hoc trade assistance payments and the outlook for new farm programs and decisions in 2019 may provide potential relief from the current outlook.

Farm Program Payments

An analysis of farm program payment rates provides details on the current payments as well as the outlook for future support. The federal farm program support comes from commodity programs created in the 2014 Farm Bill. The legislation gave producers a choice of enrollment by commodity and by county in either a price-based program (PLC) or a revenue-based program (ARC) at either the county level (ARC-CO) or the farm level (ARC-IC for “individual coverage”). As commodity prices have declined from pre-2014 levels, both ARC and PLC have become important components of the farm income safety net and also substantial infusions of cash flow for producers.

READ MORE on farm program payments and prospects through 2023, including tables of price projections, average PLC payment rates in Nebraska, and average ARC-CO payment rates in Nebraska.

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