2015 ARC-CO Payment Estimator

• November 8, 2015
• Paul Neiffer

Final 2014 crop information has been posted by the FSA and in our previous post we have recapped some of the analysis of that data.  In order to calculate estimated 2015 crop ARC-CO payment projections, we need the final yield per acre that was provided.

Since we now have that data, we have worked up a very simple spreadsheet that will calculate an estimated 2015 ARC-CO payment for your county.  To use the spreadsheet, there are four drop down boxes that you will click on and provide an entry for each:

• State
• County
• Crop
• Type (whether there is any segmentation for irrigated and non-irrigated.  Almost all counties, you will select All).

After you input this information, you then just need to input your estimate of final county yields and the final 2015 MYA price.  The benchmark price is provided in the spreadsheet.  Most of these prices are final, however, there may be some cases where it is still projected.  The calculator indicates if it is final or not.

This spreadsheet will allow you to play some what-ifs.  For example, if the spreadsheets shows I am in the maximum ARC-CO payment, how much can my estimated yield or price increase to start reducing my payment.

As an example, I took Walla Walla County (since I grew up there) and played some what ifs.  The 2015 Olympic average yield for Walla Walla County is 77 bushels.  The 2014 yield was 65 and I am fairly certain the 2015 yield is no higher than this.  The current USDA estimate for 2015 wheat MYA price is $5.00.  Our benchmark revenue is $515.90 and our maximum payment is $51.59.

After plugging in our estimates, we arrive at estimated actual revenue of $325 which is about $119 under our guarantee revenue amount.  We know that prices would have to increase by about $1 per bushel to start to reduce this maximum or our yield would need to be close to our Olympic average.  Based on current prices and what we think is a good county yield estimate, we have more than a 95% certainty that wheat farmers in Walla Walla will get a final wheat ARC-CO payment of about $51.59 or $43.85 per base acre after the 15% reduction (this assumes no additional sequester deduction).

Not all of the specialty crops are listed in this calculator such as chickpeas, sunflowers, etc.  FSA will release that data later on.  I think it takes a little longer to get final MYA price on these crops.

For  those farmers who are starting to prepare 2016 budgets, this calculator can easily work up estimated numbers for you to use in your budgets.  For those bankers who are reviewing those budgets, you can use this calculator to determine whether those amounts are reasonable, etc. based upon your belief of prices and yields.

I will do additional analysis on how much variance there was for final FSA yields versus NASS data in a later post.

If anyone finds a mistake in our calculator, please let me know ASAP so we can correct it.

Here is a link to download the calculator:

2015 ARC County ARC Estimator

Paul Neiffer, CPA

 

 

, Ag Policy, Farm Industry Trends, Farm Leadership, Farm Operations | Comments Off on 2015 ARC-CO Payment Estimator