Congress approves a new Farm Bill every five years. After a new Farm Bill is released, the Extension Ag Business Management team hosts informational meetings around the state to educate farmers about key changes in the law.
The 2018 Farm Bill allowed farmers to make annual elections. ABM hosts an annual statewide informational webinar to help crop producers understand annual election decisions regarding the 2018 Farm Bill reauthorization of Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs.
The next Farm Bill will most likely be released in 2023.
University of Minnesota Extension and the Farm Service Agency hold free educational events to help crop producers understand new decisions regarding the 2018 Farm Bill reauthorization of ARC and PLC programs.
Educational resources are provided below.
Payments are associated with the 2020 harvest yield and the subsequent 12 months of national prices that were averaged to determine the marketing year average (MYA). Payments, if any, were triggered in October 2021 and later issued to producers.
Payments are associated with the 2019 harvest yield and the subsequent 12 months of national prices that were averaged to determine the marketing year average (MYA). Payments were triggered in October 2020 and later issued to producers.
- The ARC-CO payments displayed are actual per acre payments based on county yield and MYA.
- The PLC payments displayed are estimated based on the actual per bushel PLC payment multiplied by an estimated typical PLC yield in each county.
- The difference map shows actual per acre ARC-CO payments subtracted from the estimated PLC payments.
- The darker the blue, the larger the ARC-CO payments were estimated to be as compared to PLC payments in that county.
- The darker the orange, the larger the PLC payments were estimated to be as compared to ARC-CO payments in that county.
- The maps show that as prices drop beyond the reference price, the more likely PLC is to have larger payments unless yield is notably below average.
Farm Service Agency abbreviates Agricultural Risk Coverage based on county yield as ARC-CO. ARC-CO protects 85 percent of commodity crop base acres using countywide yield and a national marketing year average (MYA) price to determine if payments are triggered.
Farm Service Agency abbreviates Price Loss Coverage as PLC. PLC protects 85 percent of commodity crop base acres using a national marketing year average price and a predetermined effective reference price to determine if payments are triggered. If the payments are triggered, the difference between the effective reference price and the MYA is then multiplied by the producer’s farm and commodity specific PLC yield.
Farm Service Agency abbreviates Agricultural Risk Coverage based on producer’s individual yield as ARC-IC. ARC-CO protects only 65 percent of covered commodity crops planted on the individual’s farm. It uses the producer’s actual yield and a national marketing year average price to determine if payments are triggered. ARC-IC is a whole farm program, meaning all commodities on a specific farm number must be enrolled in ARC-IC.
ARC and PLC are not available for all agricultural crops grown in Minnesota. Only covered commodities with established base acres are eligible for participation in ARC and PLC sign-up. The 22 covered commodities nationwide include wheat, oats, barley, corn, grain sorghum, rice, soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, sesame seed, seed cotton, dry peas, lentils, small chickpeas, large chickpeas, and peanuts. Farm Service Agency recognizes 13 covered commodities in Minnesota. University of Minnesota Extension’s Farm Bill educational analysis focuses on corn, soybean and wheat pricing and sign-up decisions.
See 2021 estimates for ARC-CO and PLC in your county
Follow the links above and select your county to see sensitivity graphs that show the county average ARC-CO yield and an estimated typical PLC yield for corn, soybeans and wheat.
Each farm has its own individual PLC yield based on actual production history (APH) multiplied by 90 percent and multiplied again by a PLC update factor. So the PLC yields in this graph are simply estimates and may not match your farm-specific PLC yields.
- The red line in the MYA column shows the effective reference price for PLC, meaning any price below that will begin triggering PLC payments. PLC payments are highlighted yellow and enclosed in a red box.
- The green highlighted cells show projected combinations of county yield and MYA prices that produce ARC-CO payments. The average county yield column for ARC-CO shows the MYA needed for a payment trigger when ARC-CO yield is average.
- The payment using the highest price possible while still triggering ARC-CO when yield is average is enclosed in a red box. At average yields, prices must fall significantly lower than current projected prices to trigger ARC-CO payments under corn and soybeans. For wheat, current price projections are below the price needed to trigger both ARC-CO and PLC.
- The text on the far right lists the estimated yield that would produce an ARC-CO payment at USDA Worldwide Agricultural Supply and Demand Estimate (WASDE) outlook prices as of January 12, 2021 for the 2021 sensitivity graphs and January 12, 2022 for the 2022 sensitivity graphs.
- As MYA prices increase, the average countywide yield needed to trigger an ARC-CO payment decreases. If prices increase beyond the MYA listed from the January WADSE, the average yield to trigger a payment would be slightly lower than listed on our graphs. If prices decrease from the MYA listed on the January WADSE, the average yield to trigger a payment would be higher than listed on our graphs.
- PLC payment triggers are never dependent on yield.
These sensitivity graphs are visual representations of price estimates. Prices may change significantly during the year and a half that transpires between selecting PLC or ARC-CO at your local USDA Service Center (March 15) and when calculations are made to determine if payments are triggered (October 1 of the following year).
The graphs are educational in nature and are not intended to project payments. If a county does not have a graph for corn, soybeans or wheat, that means FSA did not have enough yield data to release the information and we were unable to make calculations for those counties' commodities.
- Program selections for 2022 must be made by March 15, 2022, at your local USDA Service Center.
- Prices to determine MYA for 2022 will be collected between September 1, 2022, to August 31, 2023, for corn and soybeans.
- For wheat, the MYA for 2021 will be collected from June 1, 2022, to May 31, 2023.
- Payments, if triggered, would be issued after October 1, 2023.
Dairy risk management strategies include Dairy Margin Coverage.
Dairy Margin Coverage is an FSA program that analyzes the difference between milk price and feed cost, the margin. The United States all-milk price is used.
- The feed cost uses a ration calculated by the USDA using a NASS pricing for corn and premium alfalfa hay.
- The soybean meal uses AMS prices from Illinois.
- Dairy farmers can elect to cover from 5% to 95% of their annual milk production from a margin coverage from $4.00 to $9.50 in $0.50 increments.
- Dairy farmers can elect Supplemental DMC, those with 5 million pounds of production or less, can then update their production history to their 2019 production.
- Supplemental DMC will make payments, if due retroactively to January 2021.
- If not using Supplemental DMC, the amount of milk production is the dairy’s highest annual production between 2011, 2012 or 2013. A new dairy can use either the USA average production per cow or a year later than 2013.
The table below shows the premiums for each coverage level, both for Tier 1, under 5 million pounds, and Tier 2, over 5 million pounds. Discounted Tier 2 shows the discount for the 5-year commitment. The discounted Tier 1 is only applicable if the dairy signed up for the 5-year commitment or is a new dairy.
|Margin covered||Tier I||Tier II||Discounted Tier I|
The table below shows the margins calculated for 2021. Every month in 2021, except December, has had a payment at the $9.50 coverage level. December is not finalized yet.
|Month||Corn ($/bu)||Premium alfalfa hay ($/ton)||Soybean meal ($/ton)||All milk ($/cwt)||Final feed costs for DMC($/cwt)||Milk margin above feed costs for DMC($/cwt)||Payout at $9.50|
Example for a dairy with a production history of 5 million pounds at the 95 percent coverage at the $9.50 level:
- 5,000,000 lbs. x 95% = 4,750,000 lbs.
- 4,750,000 lbs. / 100 = 47,500 cwt.
- 47,500 cwt. x $0.15 = $7,125 premium for DMC
- If 5-year was locked in $7,125 x 75% = $5,343.75 premiums.
- There is an additional $100 administrative fee.
For April, the margin was $6.77:
- $9.50 - $6.77 = $2.73
- 47,500 cwt. / 12 months =3,958.333 cwt. per month
- 3,958.333 cwt. x $2.73 = $10,806.24 April payment from DMC
Here are two decision tools for farmers to use:
University of Minnesota Extension highly recommends looking at the numbers to determine if this program is helpful for your dairy. Risk management is a tool farmers cannot overlook.