Farm Bill Decision Aids

How to determine the Price Loss Coverage payment rate.

Editor’s Note: In response to questions about Price Loss Coverage payments, Bulloch County Extension agent, Bill Tyson, wrote the following explanation on his blog for how the payment is determined.

Peanut-Grower-June-2015_Page_10_Image_0001The Marketing Year Average (MYA) price for peanuts is calculated from Aug. 1 – July 31 using USDA’s National Agricultural Statistics Service (NASS) prices. Currently, we are about 75 percent of the way through the 2014 marketing year.

The Farm Service Agency (FSA) has a “Projected 2014 PLC Coverage Payment Rate” on their ARC/PLC website, which is located at www.fsa.usda.gov under the heading “Programs and Services,” click on ARC/PLC Program. The MYA price for peanuts from this source has the price at $430 per ton for peanuts and has not changed since November.

Finding The Right Price

Another source to get the MYA price for peanuts is NASS’s “Quick Stats” database, which has the current MYA price at $426 per ton. However, this average only includes August through December prices for peanuts.

NASS publishes weekly peanut prices in their Peanut Prices report, but this should not to be confused with FSA Weekly Posted Price for peanuts. Looking at published weekly prices of peanuts since Aug. 1, 2014 through last week brings the MYA of peanuts to $438 per ton. The only peanut prices from this source that are not included for each week are those values not published due to individual buyer disclosure concerns.


 

To find the 2014 Peanut Season Average Price in spreadsheet form, as created by UGA ag economist, Nathan Smith, go to www.agecon.uga.edu/extension/decisionaids, then click on “2014 Peanut Season Average Price.” The spreadsheet includes the published peanut values for each week since August 2014.


Estimating The Payment

University of Georgia Extension economist for peanuts, Nathan Smith, put together a spreadsheet that includes the published peanut values for each week since August 2014. This spreadsheet will be fairly close to the value FSA will use to determine PLC peanut payments for 2014. The only values not included in spreadsheet are those that are not published.

To find this spreadsheet, go to the UGA Agricultural and Applied Economics: Extension and Outreach webpage of Decision Aids. The various entries and spreadsheets were developed to assist farmers and ranchers, agribusinesses, lenders and others with calculations and analysis of income, costs and net returns from important decisions. It can be found at www.agecon.uga.edu/extension/decisionaids, then click on “2014 Peanut Season Average Price Calculator” to get the latest MYA price for peanuts.

Final Determination And Payment

Remember, to get the PLC payment rate, subtract the MYA from the Statutory Reference Price. At this time, it is $535 – $438.15 = $96.85, or the current estimated PLC payment for peanuts is $96.85 per ton. The final payment rate for 2014 will not be determined until after July 31, 2015. Payments for the 2014 production year will not be paid by FSA until October 2015.

To read Tyson’s blog, go to blog.extension.uga.edu/bullochag.

ARC/PLC Definitions


 

Acreage report: An annual report for each insured crop in the county in which the producer has an ownership share. It indicates the crop planted, acreage prevented from planting, the producer’s share in those crops, acres planted, the dates planted and other information. Acreage reporting dates vary from crop to crop based on the production cycle. For example, the crop insurance acreage reporting date for many counties is November 15 for winter wheat.

Base acres: A farm’s crop-specific acreage of wheat, feed grains, rice, oilseeds, pulse crops or peanuts eligible to be used for FSA program purposes. Base acres do not necessarily align with current plantings. Upland cotton base acres on the farm are renamed “generic” base acres. Benchmark price: The higher of the reference price or the respective market year average price for the covered commodity. The benchmark price is used to compute annual ARC-Individual Coverage and ARC-County Coverage benchmark revenues.

Covered commodities: Includes wheat, oats, barley, corn, grain sorghum, rice, soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe and sesame seed, dry peas, lentils, small chickpeas, large chickpeas and peanuts.

Effective price: For the specific covered commodity, the higher of the market year average price or the national average loan rate.

Generic base acres: Former upland cotton base acres. Generic base acres are not involved in, or subject to, base acre reallocation. If generic base acres are planted to a covered commodity in a given year, then those acres are considered base acres for that planted covered commodity in that crop year. For example, if a farm with 500 generic base acres plants 250 of those generic base acres to corn, and the farm elected ARC-County Coverage for corn, then those 250 generic base acres are treated as corn base in that crop year and receive an ARC-County Coverage payment if one is triggered.

Limited resource producer: Limited resource producer status may be determined using the USDA Limited Resource Farmer and Rancher Online Self Determination Tool located on the Limited Resource Farmer and Rancher page at www.lrftool.sc.egov.usda.gov . The automated system calculates and displays adjusted gross farm sales per year and the higher of the national poverty level or county median household income.

Market year average (MYA) price: Reflects the average price received by farmers across the nation at the point of first sale, across all grades and qualities of the crop. USDA publishes MYA price projections in the monthly World Agricultural Supply and Demand Estimates report.

Reference price: Prices for covered commodities set in Title I of the 2014 Farm Bill that apply for 2014-2018 crops and are used in the PLC and ARC programs. For example, the reference price for wheat is $5.50 per bushel for 2014-2018 crops.

Socially disadvantaged producer: Includes American Indians or Alaskan Natives, Asians or Asian Americans, Blacks or African Americans, Native Hawaiians or other Pacific Islanders, Hispanics and women.

Supplemental Coverage Option: A county level revenue- based or yield-based insurance optional endorsement that covers a portion of losses not covered by the deductible of the same crop’s underlying insurance policy.

Find other tools and information on the FSA ARC/PLC program, such as the Base Reallocation Tool; Yield Update Tool; Program Schematic for CTP/ARC/PLC Programs; Projected 2014 Crop Reference Prices; National Average Loan Rates; PLC Payment Rates; PLC maximum payment rates; and Irrigated/Non-Irrigated County Designations. Answers to Frequently Asked Questions can also be found.

Source: www.fsa.usda.gov