“2018 Farm Bill What-If Tool” Estimates Program Payments

Corn with brittle snap damage after a storm. Photo: Mark Mauldin, University of Florida

The 2018 Farm Bill What-If Tool has been released (click here to download). This Microsoft Excel spreadsheet will estimate Price Loss Coverage (PLC) and Agricultural Risk Coverage at the county level (ARC-CO) for specific prices and yields that a user enters.

Currently, the tool contains data for all counties and crops for which the Farm Service Agency (FSA) plans on offering ARC-CO. Updates will be made to the tool as more data becomes available, and as prices and yields come into clearer focus.

Output of the Tool

Figure 1 is a view of the main page showing calculated payments for PLC and ARC-CO for the 2019 and 2020 program years given a specific set of prices and yields. Users can make entries in boxes with a yellow background and blue numbers or letters. Users should first choose the state, county, and crop of interest.

In the example shown in Figure 1, results are given for corn grown in DeKalb County, Illinois. Based on these selections, the model will show available practices to distinguish irrigated from non-irrigated where applicable, or include all practices. For corn in DeKalb county, the only practice is “all”.

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The model will bring in defaults for:

  • PLC yield — these are the yields used in PLC calculations. Default values are average PLC yields by commodity and county from the Farm Service Agency (FSA).
  • County yields for 2018, 2019, and 2020. Yields for 2018 have not been released by the FSA. A default yield based on available information is given for 2018. For the example in Figure 1, the 2018 default yield is 200 bushels per acre. Also included are default yields for 2019 and 2020. Currently these defaults are at trend levels. In Figure 1, trend levels are 208 bushels per acre for 2019 and 210 bushels per acre for 2020. Future versions of the tool will update these values as more information on yields become available
  • Prices for 2019 and 2020. Currently the estimated prices for 2019 and 2020 are USDA projections for 2019. For corn, a $3.80 per bushel price is used for both 2019 and 2020.

Users can change the default PLC and county yields, and prices. As shown in the tan box in Figure 1, the default prices and yields result in PLC and ARC-CO payments of $0 per base acre for both 2018 and 2019 in this example.

The model will allow users to view the calculations of various items including:

  • ARC-CO guarantee and revenues (green box in Figure 1);
  • Effective reference prices and PLC payments (Table 1 from the model in the appendix)
  • Benchmark yields for ARC-CO (Tables 2 and 3 of the model shown in the appendix, and
  • Benchmark prices for ARC-CO (Table 4 of the model shown in this appendix).

Uses of Tool

At this point, 2019 yields still are uncertain, but are beginning to come into clearer focus as harvest progresses. An ARC-CO payment of $0 per base acre is expected given a 208 bushel per acre yield for corn in DeKalb County (see Figure 1). Yields likely will be lower than 208 bushel per acre in 2019. The following payments were calculated for different yields:

  • 165 bushels per acre results in a $33 per base acre payment for ARC-CO,
  • 170 bushel per acre results in a $16 per base acre payment for ARC-CO, and
  • 175 and higher yields results in a $0 per base acre payment.

The above payments were calculated used a MYA price of $3.80 per bushel. ARC-CO payments also will vary with higher and lower MYA prices.

Comparison to Gardner Payment Calculator

The Gardner-farmdoc Payment Calculator provides expected payments and likelihood of payments for ARC-CO and PLC for years from 2019 through 2022. These estimates are based on a simulation model encompassing historical relationships between price and yield changes. The Microsoft Excel spreadsheet does not include this historical information and allows a user to enter their own estimates of a set of prices and yields to see what ARC-CO and PLC payments result.

The Excel tool also is useful if a detailed understanding of ARC-CO and PLC calculations is desired. Used together, the Gardner-farmdoc Payment Calculator will provide information on expectations of payments while the 2018 Farm Bill What-If tool will provide analysis of scenarios.

Continuing Work

Work will continue on both the Gardner-farmdoc Payment Calculator and the Microsoft Excel based 2018 Farm Bill What-If Tool. Continue to check back as we update yields and prices in both tools. Crops will be added to the Gardner-farmdoc Payment Calculator. An ARC-IC and yield updating utility will be added to the 2018 Farm Bill What if Tool.

Appendices

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Gary Schnitkey, Ryan Batts, Krista Swanson, Nick Paulson, Jonathan Coppess, and Carl Zulauf

 


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