Farm Bill Decision Tool is Available

• November 3, 2019
• Paul Neiffer

Two schools have received funds from USDA to develop a Farm Bill Decision tool – Texas A&M and University of Illinois.  The first one available is from Texas A&M and here is my comments on the tool (We will comment on the U of I tool as it becomes available):

• You first set up all of your farms by FSA farm number.  You will input your base acres for each of the crops covered under the Farm Bill.
• You will need to input at least your current PLC yield.  You can then input your yield information for 2013-2017 – both acres and yield per acre.
• You can then input your estimated MYA price for 2019 and 2020 or allow the tool to use the current USDA estimated MYA price.
• The tool will then calculate an estimated total payments for PLC and ARC-CO for 2019 and 2020.

One caution.  When you input your estimated price for both years, it appears that the software will run 500 scenarios assuming various prices both above and below your inputted price.  In my opinion, this appears to generate a much higher payment for 2019 than I would expect.

For example, let’s look at corn.  The current estimated MYA price for 2019 is $3.80.  This means there would be no payment for PLC since the reference price is $3.70.  Corn would have to drop at least 11 cents before any payment would be made for PLC.

However, when I input a current yield of 205 bushels into the software for Buchanan County, Iowa and use the $3.80 current MYA price, the software calculates a PLC payment of $38 for 2019 and $63 for 2020.  ARC-CO would be $7 and $20 respectively. 

Based on current trends in corn prices and issues with the plantings in South America, it seems very difficult for corn to drop below $3.70.  Therefore, I would expect no payment for PLC or ARC for this year (ARC may have a payment with a material drop in yields).

However, the good news is that we still have about five months to see the final trend in MYA price and estimated yields.  You can at least input your data for each farm and continue to update as we get more price and yield information.  

But make sure to understand that estimated payment amounts may be overstated, at least for 2019.

 

, Ag General, Ag Policy | Comments Off on Farm Bill Decision Tool is Available