Corn, soybean and wheat growers would receive significant payments — as high as $80 an acre for corn — under the insurance-like Agriculture Risk Coverage subsidy based on the low commodity prices now forecast, says Ohio State economist Carl Zulauf.
Many farmers would lose money on their 2016 crops because of low prices, so “these payments should not be viewed as eliminating the need to reduce cash flow now or through 2017,” said Zulauf at farmdoc daily.
“At best, these payments provide some temporary cushion as farmers continue to cut costs,” wrote Zulauf, who cautioned there are many uncertainties about yields or revenues when crops are months away from harvest. ” USDA would issue ARC payments, to protect revenue from the impact of low prices and poor yields, on this year’s crops in fall 2017. “These payments could be important cash flows in 2017 if commodity prices remain low.”
Based on USDA’s current estimates of farm-gate prices and average yields, most corn-growing counties would get ARC payments, with $40-$80 per base acre predominating, said Zulauf. Many soybean and wheat counties would trigger payments, he said, with $30-$60 per base acre being the most common. In wheat counties, the predominate payments would be $14-$45 per base acre. Base acres are land that qualifies for farm program payments.