2017/18 ARC-CO Payment Rates Have Been Released

Persistently low commodity prices have many searching for an understanding of what farm bill tools are available for farmers to mitigate the impacts of bearish prices on their financial bottom line. Two farm bill commodity assistance programs, Agriculture Risk Coverage and Price Loss Coverage, are designed to make payments to producers when national marketing year average crop prices, or crop revenue, falls below certain thresholds.

On Oct. 4 USDA’s Farm Service Agency released its ARC-CO payment rates for the 2017/18 marketing year. The current list includes several row crops, but not all. Crops addressed in this release include barley, canola, corn, grain sorghum, peanuts, soybeans, wheat and others.

ARC-CO is a county-based program, with payment rates determined by a statutory formula for each county. A program payment under ARC-CO is made when actual crop revenue, defined as the product of the county yield and marketing year average price, falls below 86 percent of the benchmark revenue, defined as the product of the five-year Olympic Moving Average county yield and five-year OMA crop price. Per-acre payments are capped at 10 percent of the benchmark revenue guarantee. ARC-CO helps growers manage revenue risk by making program payments based on average crop revenue – thereby protecting against both price and yield declines.

In the U.S., payments for the 2017 marketing year are listed for nearly 7,700 counties (corn has ~800 counties, soybeans have ~700 counties and wheat has ~1,600 counties). The payment rates reflect a per-acre payment made on eligible acres (85 percent of base acres in that commodity). For corn, the ARC-CO payment rate ranged from 4 cents in Liberty County, Montana, to $97 in Walla Walla County, Washington. The average payment rate for all counties making a payment was $36. Soybeans saw a payment rate ranging from 19 cents in Pawnee County, Oklahoma, to $67 in Frontier County, Nebraska. The average payment rate for all counties making a payment was $26. In terms of wheat, the payment rate ranged from 13 cents in Navarro County, Texas, to $77 in Jerome County, Idaho, with an overall average payment rate of $27.