Help on Updating Your Payment Yield

Farmdoc Daily released information on Friday on updating your farm payment yields.  These payment yields will be used in calculating any PLC payments and will not affect ARC calculations.  However, if the option to update yields will result in higher yields, it will usually pay to update the yield since future farm bills may refer to these yields.

Current yields are based upon the 2013 counter-cyclical payment yields which in turn are either the payment yields in place at the end of the 1996 farm bill or the updated yields given to farmers by the 2002 farm bill.  Farmdoc daily does a good job of explaining how those yields were calculated and there is a good reference to an economic analysis of those farmer’s decisions.  As you can guess, farmers updated yields where it would pay them more money.

So, the option is to retain your current yields or update them to your average yields for 2008 to 2012 on a crop-by-crop basis.  If any of your yields for any year are less than 75% of the 2008-2012 county average, then you may substitute that yield for your farm yield.  As an example:

As you can see, the low yield of 108 for 2008 was replaced with the county average 148 yield.  After running the numbers, the payment yield for corn for this farmer will be 149.  The farmer will then need to compare that number to his/her 2013 CCP yield.  If the 2008-2012 number is higher, then the farmer will update to the new number,  If not, then the farmer will retain the old CCP number.

This option is done for each crop.  The farmer is not locked into updating or retaining all yields together, but rather on a covered-by-covered crop basis.

Paul Neiffer, CPA