A few months ago, the Farm Service Agency (FSA) released all the information necessary to calculate 2021 commodity title payments. For 2021, Price Loss Coverage (PLC) did not make payments for corn, soybeans, and wheat. For 2021, Agricultural Risk Coverage at the County Level (ARC-CO) did not make payments for corn, soybeans, and wheat in Illinois, Indiana, and Iowa. Outside the I-states, a few counties received 2021 ARC-CO payments if their yields were severely depressed. 

For 2022, current prices for corn, soybeans, and wheat suggest that PLC will not make payments, and few counties will receive ARC-CO payments. The 2022 market year for corn and soybeans began in September 2022 and ends in August 2023. Final determinations of payments for PLC and ARC cannot be made until the final market year prices average (MYA) prices are known, which is at the end of the marketing year. County-level yields for corn and soybeans for 2022 are typically published by USDA in January of the following year which would be January 2023 for the 2022 crop. For the 2022 crop, the benchmark prices for ARC-CO are $3.70 for corn and $9.12 for soybeans. The benchmark revenue for ARC-CO is 86% times the benchmark price times the county’s benchmark yield (which is the 5-year Olympic average of the trend-adjusted yields).  For Calhoun County, Iowa, for example, this would be:

 0.86 * $3.70* 207.54 = $660.39 per acre.  

With the projected MYA price for corn of $6.70 in the latest WASDE report, it would require a county yield of 98.56 bushels per acre or less for corn in Calhoun County, Iowa for an ARC-CO  payment to be made.  Or, once we know the yield (and for this example, let’s assume it is 97% of the trend-adjusted yield which would be 201.3 bushels per acre. At that county-level yield, it would take a MYA price of $3.28 or less to result in an ARC-CO payment for Calhoun County, Iowa corn for the 2022 marketing year. That would require the MYA price to be less than 49% of the current estimated MYA of $6.70 per bushel. With nearly 3 months of the marketing year already set, the average price of corn for the remainder of the marketing year would have to be less than $2.20 per bushel for an ARC-CO payment to be made on corn in Calhoun County, Iowa in October 2023.

For soybeans, the situation is similar to that of corn. It is highly unlikely that any PLC payments will be made for soybeans for the 2022 crop. For ARC-CO soybeans in Calhoun County, Iowa, the current benchmark revenue is $449.65 per acre which is 86% of $9.12 times 57.33, the applicable benchmark price and the 5-year Olympic Average trend-adjusted soybean yield for Calhoun County.

With the projected MYA price for soybeans of $14.00 per bushel in the latest WASDE report, it would require a county yield of 32.12 bushels per acre or less to trigger an ARC-CO soybean payment in Calhoun County, Iowa at the expected MYA price of $14.00/bushel.  Or, once we know the county yield (likely in January 2023), and for this example, let’s assume that yield is 95% of the trend adjusted yield which would be 54.46 bushels per acre. At that county-level yield, it would take a MYA price of $8.26 or less to result in an ARC-CO payment for Calhoun County, Iowa soybeans for the 2022 marketing year. That would require the MYA price to be less than 59% of the current estimated MYA price of $14.00 per bushel. With nearly 3 months of the 2022 marketing year already set, the average price of soybeans for the remainder of the marketing year would need to be $6.47 per bushel or less for an ARC-CO soybean payment to be made on soybeans in Calhoun County, Iowa in October 2023.

All information needed to calculate 2023 effective reference prices and ARC-CO benchmark are now available. The ARC-CO benchmark prices for corn and soybeans will be $3.98 and $9.57 respectively. For Calhoun County, the Olympic average corn yield is likely to be nearly the same as for 2022, so the benchmark revenue for 2023 is going to be higher, at $710.37 using the 2022 Olympic average yield. With a $6 MYA price, the corn yield would need to be less than 118.4 bushels per acre, or with a normal yield, the MYA price would need to be below $3.42 to trigger an ARC-CO corn payment in Calhoun County, Iowa for the 2023 crop.

For soybeans in Calhoun County, Iowa the ARC-CO yield is likely to be the same as in 2022 at 57.33 bushels per acre. The benchmark price will increase to $9.57 so the benchmark revenue will be $471.84 per acre. With a $13 MYA price, the soybean yield would need to be less than 36.3 bushels per acre, or with a normal yield, the MYA price would need to be below $8.23 to trigger an ARC-CO soybean payment in Calhoun County, Iowa for the 2023 crop.

Economic analysis provided by David Miller, Consulting Chief Economist, Decision Innovation Solutions on behalf of Iowa Farm Bureau.