Program Payments in the Bank

Two income support mechanisms for farmers in Title I of the Farm Bill are the Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs. ARC provides support when actual revenue for a farm is less than a guarantee based on historical data and market conditions. PLC provides support when the market price for a commodity falls below its reference price. Each year farmers choose the program in which to enroll. Payments under both programs, if triggered, are made on "base" acres. Base acres are allocated to a commodity but have no relationship with the crop planted. Payments are distributed in October following the crop marketing year's end. Thus, payments to Nebraska farmers for the 2023 crop year were distributed last month.

Rapeseed was the only commodity which triggered payments under PLC which, according to American Farm Bureau, accounts for less than .001% of base acres nationwide. However, USDA Farm Service Agency figures show payments were triggered under ARC-County (ARC-CO) and ARC-Individual (ARC-I) programs. As of October 28, ARC-CO payments to Nebraska producers equaled nearly $57 million. Payments on corn were $33 million, those on soybeans were $10.5 million, and those on wheat were $7.4 million. Payments under ARC-I for the 2023 crop totaled less than $1 million.

Figures 1-3 show ARC-CO payment rates per base acre in Nebraska counties on dryland corn, soybeans, and wheat. Nearly all payments for corn and soybeans were for dryland with payments concentrated in counties in central, south central, and northeast Nebraska. Payment rates for corn ranged from $1.03 per acre in Custer County to $85.16 in Cuming County with an average county payment of $56.64 per acre. Producers in 38 counties received payments. Payments for soybeans ranged from $7.47 in Pierce County to $59.79 per acre in York County with an average of $43.04. Soybean farmers in 43 counties received payments. Farmers in Hitchcock County were the only ones receiving payments for irrigated corn and soybeans, $34.92 and $60.78 per acre respectively.

Payments to wheat producers were triggered for irrigated and dryland along with a combined weighting of the two practices. Payments on dryland ranged from $9.27 per acre in Morrill County to $32.54 per acre in Hitchcock County. And farmers in a dozen counties received payments for irrigated wheat ranging from $0.32 to $40.57 per acre. Producers in 46 counties received payments for combined dryland and irrigated practices ranging from $21.75 to $39.72 per acre.

FIGURE 1. 2023 ARC-CO Payments - Dryland Corn ($/base acre)

Source: USDA Farm Service Agency

FIGURE 2. 2023 ARC-CO Payments - Dryland Soybeans ($/base acre)

Source: USDA Farm Service Agency

FIGURE 3. 2023 ARC-CO Payments - Dryland Wheat ($/base acre)

Source: USDA Farm Service Agency

Nationwide, payments of $447 million were distributed under the Title I programs. Agricultural economists with farmdoc daily said payments under ARC-CO were mostly concentrated in Nebraska and Kansas. Other counties receiving payments were generally scattered across the U.S. The American Farm Bureau estimates that over 5.5 million acres of corn and 3.2 million acres of soybeans qualified for ARC-CO payments nationwide consisting of 6% of total enrolled base acres for each crop. Over 12.9 million wheat acres qualified for an ARC-CO payment, being 21% of total enrolled wheat base acres.

No doubt farmers would rather earn their revenue through the market. But there are times when market conditions do not yield positive returns. During these times farm programs can serve as a backstop and work to stabilize farm income.