Remember ARC-CO Payments Are Not Contingent on Planted Acres
I was reading a comment a farmer had regarding their 2017 planting intentions. In the comment, they indicated that they were leaning toward soybeans partly due to the fact that soybeans ARC-CO for their county would pay more than corn ARC-CO. This, is in fact, wrong.
ARC-CO payments for corn, soybeans and all other crops are based upon your base acres at the time that you sign up. It does not matter what crop you plant, you will be paid the same amount. Therefore, base your 2017 planting intentions on the economics of what you plant, not any money you may get from ARC-CO. That number will always be the same.
For example, assume you have 1,000 base acres of corn and 1,000 base acres of soybeans. You expect to receive zero corn ARC-CO payments for the 2017 crop (paid in 2018) and $75,000 of soybean ARC-CO payments. Whether you plant 2,000 acres of corn, 1,000 of each or 2,000 acres of soybeans, you will receive $75,000.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
I want to test my understanding of the affect of “generic” base acres. Change the example to have base acres allocated as 750 acres corn, 750 acres soybeans, & 500 acres are generic. Then consider 5 scenarios: (1) 2000 acres corn; (2) 1500 acres corn, 500 acres soybeans; (3) 1000 acres each; (4) 500 acres corn, 1500 acres soybeans; (5) 2000 acres soybeans.
I thought the first 2 scenarios would result in payment of $56250 ( from 750 base acres of soybeans). The 3rd scenario would be $75000 (from 750 base acres AND 250 generic acres planted in soybeans). The last 2 scenarios would be $112500 (750 base acres and 500 generic acres).
In this twist, the planting decision would affect the amount paid IF my understanding was right. Is it?
I also wondered how one would be able to predict before planting in 2017 what the payment would be.