![Page 1: Farm Bill ARC and PLC Payout Projections 2014-2018 Greg Halich 859-257-8841Greg.Halich@uky.edu 311 CE Barnhart Dept. Agricultural Economics University](https://reader035.vdocuments.us/reader035/viewer/2022062217/56649d6f5503460f94a5179c/html5/thumbnails/1.jpg)
Farm Bill ARC and PLC Payout
Projections 2014-2018
Greg [email protected]
311 CE Barnhart Dept. Agricultural EconomicsUniversity of KentuckyLexington, KY 40546
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Agricultural Economics
Corn and Soybean Prices2015-2018
Price Scenario: Corn Beans Wheat
Low $3.00 $7.75 $4.25 Med $4.00 $10.00 $5.75 High $5.00 $12.25 $7.25
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Agricultural Economics
Corn and Soybean Prices2015-2018
Price Scenario: Corn Beans Wheat
Low $3.00 $7.75 $4.25 Low-Med $3.50 $8.88 $5.00 Med $4.00 $10.00 $5.75
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Agricultural Economics
PLCCorn $3.70
Soybeans $8.40
Wheat $5.50
85% base acres
90% payment yield (for updated yields)
→ 76.5% multiplier
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ExampleCorn 150 bu production history
$3.00/bu avg. marketing year price
$3.70 – $3.00 = $.70/bu margin
$.70/bu margin x 150 bu x .765
= $80/base acre PLC payout
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Agricultural Economics
Three Farm Level Yields
Corn YieldSoybean
YieldWheat Yield
125 bu 39.0 bu 60 bu
150 bu 45.5 bu 70 bu
175 bu 51.5 bu 80 buNote: Farm level avg. yields before 90% payment adjustment.
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Baseline Scenario 2014 (per acre)$10.00 Soybeans
$3.50 Corn $6.00 Wheat
Estimated PLC Payment
Corn
PaymentSoybeansPayment
WheatPayment
125 bu corn $19 $0 $0
150 bu corn $23 $0 $0
175 bu corn $27 $0 $0
Note: per base acre
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Baseline Scenario 2015-18 (per acre)$10.00 Soybeans
$4.00 Corn $5.75 Wheat
Estimated PLC Payment
Corn
PaymentSoybeansPayment
WheatPayment
125 bu corn $0 $0 $0
150 bu corn $0 $0 $0
175 bu corn $0 $0 $0
Note: per base acre
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Low Price Scenario 2015-18 (per acre)$7.75 Soybeans
$3.00 Corn $4.25 Wheat
Estimated PLC Payment
Corn
PaymentSoybeansPayment
WheatPayment
125 bu corn $67 $19 $57
150 bu corn $80 $23 $67
175 bu corn $94 $26 $77
Note: per base acre
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Low-Med Price 2015-18 (per acre)$8.88 Soybeans
$3.50 Corn $5.00 Wheat
Estimated PLC Payment
Corn
PaymentSoybeansPayment
WheatPayment
125 bu corn $19 $0 $23
150 bu corn $23 $0 $27
175 bu corn $27 $0 $31
Note: per base acre
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Agricultural Economics
ARC (County)
85% base acres
86% program crop revenue benchmark
10% payment range
→ 76 – 86% coverage
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Estimated ARC Coverage Larue County 2014
Corn Soybeans Wheat
Olympic Avg Yield 150.0 47.3 63.3
Olympic Avg Price $5.29 $12.27 $6.39
Olympic Avg Revenue $793 $581 $405
Revenue Guarantee (start) $682 $499 $348
Revenue Guarantee (end) $603 $441 $308
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Baseline Scenario 2014 (per acre)$10.00 Soybeans
$3.50 Corn $6.00 Wheat ARC Payout
Corn
PaymentSoybeansPayment
WheatPayment
125 bu corn $67 $25 $0
150 bu corn $67 $25 $0
175 bu corn $67 $25 $0
Note: Assumed 143 bu corn, 47 bu soybeans, 74 bu wheat 2014; per base acre
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Estimated ARC Coverage Larue County 2015
Corn Soybeans Wheat
Olympic Avg Yield 140.0 46.3 67.7
Olympic Avg Price $5.29 $12.27 $6.56
Olympic Avg Revenue $740 $568 $444
Revenue Guarantee (start) $637 $489 $382
Revenue Guarantee (end) $563 $432 $337
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Baseline Scenario 2015 (per acre)$10.00 Soybeans
$4.00 Corn $5.75 Wheat ARC Payout
Corn
PaymentSoybeansPayment
WheatPayment
125 bu corn $48 $7 $2
150 bu corn $48 $7 $2
175 bu corn $48 $7 $2
Note: Assumed 143/47/74 bu corn/beans/wheat 2014; 145/48/66 bu corn/beans/wheat 2015
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Med-Low Price 2015 (per acre)$8.88 Soybeans
$3.50 Corn $5.00 Wheat ARC Payout
Corn
PaymentSoybeansPayment
WheatPayment
125 bu corn $63 $48 $38
150 bu corn $63 $48 $38
175 bu corn $63 $48 $38
Note: Assumed 143/47/74 bu corn/beans/wheat 2014; 145/48/66 bu corn/beans/wheat 2015
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Low Price Scenario 2015 (per acre)$7.75 Soybeans
$3.00 Corn $4.25 Wheat ARC Payout
Corn
PaymentSoybeansPayment
WheatPayment
125 bu corn $63 $48 $38
150 bu corn $63 $48 $38
175 bu corn $63 $48 $38
Note: Assumed 143/47/74 bu corn/beans/wheat 2014; 145/48/66 bu corn/beans/wheat 2015
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ARC Payout 2015-18 (per acre)$4.00 Corn $10.00 Soybeans $5.75 Wheat
Corn Soybeans Wheat
2014 $67 $25 $0
2015 $48 $7 $2
2016 $15 $22 $15
2017 $0 $0 $0
2018 $0 $0 $0
Note: Assumed 143/47/74 bu corn/beans/wheat 2014; 145/48/66 bu corn/beans/wheat 2015-2018
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PLC Payout 2015-18 (per acre)$4.00 Corn $10.00 Soybeans $5.75 Wheat
Corn Soybeans Wheat
2014 $23 $0 $0
2015 $0 $0 $0
2016 $0 $0 $0
2017 $0 $0 $0
2018 $0 $0 $0
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ARC Payout 2015-18 (per acre)$4.00 Corn $10.00 Soybeans $5.75 Wheat
Yields Drop 20% in 2017
Corn Soybeans Wheat
2014 $67 $25 $0
2015 $48 $7 $2
2016 $15 $22 $15
2017 $44 $47 $36
2018 $0 $0 $0
Note: Assumed 145/48/66 bu corn/beans/wheat 2015,16,18; 116/38/53 bu corn/beans/wheat 2017
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PLC Payout 2015-18 (per acre)$4.00 Corn $10.00 Soybeans $5.75 Wheat
Yields Drop 20% in 2017
Corn Soybeans Wheat
2014 $23 $0 $0
2015 $0 $0 $0
2016 $0 $0 $0
2017 $0 $0 $0
2018 $0 $0 $0
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ARC Payout 2015-18 (per acre)$4.00 Corn $10.00 Soybeans $5.75 Wheat
Low Price Scenario 2017
Corn Soybeans Wheat
2014 $67 $25 $0
2015 $48 $7 $2
2016 $15 $22 $15
2017 $51 $47 $36
2018 $0 $0 $0
Note: Assumed 143/47/74 bu corn/beans/wheat 2014; 145/48/66 bu corn/beans/wheat 2015-2018
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PLC Payout 2015-18 (per acre)$4.00 Corn $10.00 Soybeans $5.75 Wheat
Low Price Scenario 2017
Corn Soybeans Wheat
2014 $23 $0 $0
2015 $0 $0 $0
2016 $0 $0 $0
2017 $80 $23 $67
2018 $0 $0 $0
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Sharp Increase and then Decrease in Prices
Corn Soybeans Wheat
2014 $3.50 $10.00 $6.00
2015 $4.00 $10.00 $5.75
2016 $5.00 $12.25 $7.25
2017 $4.00 $10.00 $5.75
2018 $3.50 $8.88 $5.00
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ARC Payout 2015-18 (per acre)Sharp Increase then Decrease in Prices
Corn Soybeans Wheat
2014 $67 $25 $0
2015 $48 $7 $2
2016 $0 $0 $0
2017 $0 $21 $14
2018 $9 $15 $31
Average $25 $14 $9
Note: Assumed 143/47/74 bu corn/beans/wheat 2014; 145/48/66 bu corn/beans/wheat 2015-2018
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PLC Payout 2015-18 (per acre)Sharp Increase then Decrease in Prices
Corn Soybeans Wheat
2014 $23 $0 $0
2015 $0 $0 $0
2016 $0 $0 $0
2017 $0 $0 $0
2018 $23 $0 $27
Average $9 $0 $5
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Major Drop in Prices
Corn Soybeans Wheat
2014 $3.50 $10.00 $6.00
2015 $4.00 $10.00 $5.75
2016 $3.50 $8.88 $5.00
2017 $3.00 $7.75 $4.25
2018 $3.00 $7.75 $4.25
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ARC Payout 2015-18 (per acre)Major Drop in Prices
Corn Soybeans Wheat
2014 $67 $25 $0
2015 $48 $7 $2
2016 $59 $50 $39
2017 $50 $47 $36
2018 $33 $22 $34
Average $51 $30 $22
Note: Assumed 143/47/74 bu corn/beans/wheat 2014; 145/48/66 bu corn/beans/wheat 2015-2018
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PLC Payout 2015-18 (per acre)Major Drop in Prices
Corn Soybeans Wheat
2014 $23 $0 $0
2015 $0 $0 $0
2016 $23 $0 $27
2017 $80 $23 $67
2018 $80 $23 $67
Average $41 $9 $32
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Even Worse Prices
Corn Soybeans Wheat
2014 $3.50 $10.00 $6.00
2015 $3.50 $8.88 $5.00
2016 $3.00 $7.75 $4.25
2017 $2.50 $6.62 $3.50
2018 $3.00 $7.75 $4.25
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ARC Payout 2015-18 (per acre)Even Worse Prices
Corn Soybeans Wheat
2014 $67 $25 $0
2015 $63 $48 $38
2016 $58 $50 $39
2017 $49 $45 $36
2018 $22 $3 $33
Average $52 $34 $29
Note: Assumed 143/47/74 bu corn/beans/wheat 2014; 145/48/66 bu corn/beans/wheat 2015-2018
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PLC Payout 2015-18 (per acre)Even Worse Prices
Corn Soybeans Wheat
2014 $23 $0 $0
2015 $23 $0 $0
2016 $80 $23 $67
2017 $138 $62 $107
2018 $80 $23 $67
Average $69 $21 $48
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Agricultural Economics
Discussion
• ARC vs PLC
→ Corn
→ Soybeans
→ Wheat • PLC better with pessimistic prices. • PLC + SCO may be better overall• Low base acre % favors PLC + SCO