Farm Programs

Eligible farm operators have from now until March 15 to enroll in the 2022 farm program at their local U.S. Department of Agriculture Farm Service Agency offices. Eligible cops include corn, soybeans, wheat, oats, bar- FARM PROGRAMS ley, grain sorghum, long grain rice, medium/short By Kent Thiesse grain rice, temperate japonica rice, seed MARKETING cotton, dry peas, lentils, large and small chickpeas, peanuts, sunflower seed, canola, flaxseed, mustard seed, rapeseed, safflower, crambe, and sesame seed.

Producers can choose between the price-only Price Loss Coverage (PLC) and revenue-based Ag Risk Coverage (ARC) program choices for the 2022 crop production year. The ARC program choice includes both the county-yield based ARC-CO program choice (which is most popular) and the ARC-IC program, which is based on farm-level yields. If no choice is made, the 2021 farm program choice will remain in place for 2022.

Crop base acres for 2022 will remain at the same levels as 2019-2021 for all crops on most farms. The only adjustments in base acres will be for crop acres added via land purchases or land rental agreements or acres no longer eligible for farm program payments.

The 2022 farm program yields on individual FSA farm units, which were last updated in 2020, will be used to calculate potential PLC payments. The ARC-CO benchmark yields for 2022 are based on the olympic average Risk Management Agency county average yields for the 2016 to 2020 crop years. The national market year average price for those same years is averaged to calculate the 2022 benchmark price for the ARC-CO and ARC-IC programs. All potential ARC-CO payments will be based on data for the county that an FSA farm unit is located in.

Calculation formulas, etc. for the PLC, ARC-CO and ARC-IC programs remain the same as in previous years. PLC payments for 2022 will be made if the final market year average price for 2022 falls below the reference price for a given crop. ARC-CO payments for 2022 will be made if the final county revenue for the year (county yield multiplied by the final 2022 market year average price) falls below the 2022 benchmark revenue for a given crop. Calculations for the ARC-IC program are the same as for ARC-CO, except ARC-IC uses farm-level yield data and considers all crops on a farm unit together for calculation of potential payments in a given year. PLC and ARC-CO payments are paid on 85 percent of crop base acres, while ARC-IC payments are paid on only 65 percent of base acres.

2022 Farm Program Decision Table A guide to aide in Farm Program decisions for the 2022 crop year

Reasons to Choose Reasons to Choose

CROP PRICE LOSS COVERAGE (PLC)

AG RISK COVERAGE (ARC-CO) (Price only) (Yield and price using county yields) • Think that the final market year average • Think that the final market year average corn price will be below $3.70 per bushel corn price will be above $3.70 per bushel For 2022-23.(*) for 2022-23.(*) 2021-22 USDA market year average estimate Final market year average price was $3.70 per bushel = $5.45 per bushel or lower from 2014 to 2019. CORN 2020-21 final market year average price = (Market year average price will likely be above $3.70 for $4.53 per bushel 2021-22) • Want price protection from $3.70 to $2.20 per • Price where ARC-CO payments would begin at bushel (PLC has a higher maximum payment various percentage of county benchmark yield: than ARC-CO or ARC-IC) 100 percent benchmark yield = $3.18 per bushel • Feel that final county average yield in 2022 90 percent benchmark yield = $3.54 per bushel will be above a 15 percent decline from the 80 percent benchmark yield = $3.98 per bushel county benchmark yield 70 percent benchmark yield = $4.55 per bushel • Think that the final market year average • Think that the final market year average soybean price soybean price will be below $8.40 per bushel will be above $8.40 per bushel for 2021. for 2022-23.(*) 2021-22 USDA market year average estimate Final market year average price was above $8.40 per bushel = $12.10 per bushel from 2014 to 2020.(*) SOYBEANS Final 2020-21 market year average price = (Market year average price will likely be above $8.40 for $10.80 per bushel 2021-22) • Want price protection from $8.40 to $6.20 • Price where ARC-CO payments would begin at per bushel (Higher maximum payment) various percentage of county benchmark yield: • Feel that final county average yield in 2022 100 percent benchmark yield = $7.84 per bushel will be above a 15 percent decline from 90 percent benchmark yield = $8.71 per bushel the county benchmark yield. 80 percent benchmark yield = $9.80 per bushel 70 percent benchmark yield = $11.20 per bushel • Think that the final market year average • Think that the final market year average wheat price wheat price will be below $5.50 per bushel will be above $5.50 per bushel for 2021.(**) for 2022-23.(**) Final market year average price was $5.50 per bushel 2021-22 USDA market year average estimate or lower from 2015 to 2020. = $7.05 per bushel (Market year average price will likely be above $5.50 WHEAT Final 2020-21 market year average price = for 2020-21.) $5.05 per bushel • Price where ARC-CO payments would begin • Want price protection from $5.50 to $3.38 at various percentages of county benchmark yield: per bushel (higher maximum payment) 100 percent benchmark yield = $4.73 per bushel • Feel that the final county average yield in 90 percent benchmark yield = $5.26 per bushel 2022 will be above a 15 percent decline 80 percent benchmark yield = $5.91 per bushel from the county benchmark yield. 70 percent benchmark yield = $6.76 per bushel

(*) 2022-23 market year average price for corn and soybeans is calculated from Sept. 1, 2022 to Aug. 31, 2023 and finalized on Sept. 30, 2023. (**) 2022-23 market year average price for wheat and small grains is calculated from June 1, 2022 to May 31, 2023 and finalized on June 30, 2023. Reasons to choose ARC-IC (Price & Yield using Farm Yields): FSA farm units with a single crop planted in 2022 that could have very low yields in 2022, compared to 5-yr. (2016-20) average RMA yields. FSA farm units with potential for low yields in 2022 in a County not likely to receive 2022 ARC-CO payments. Remember: All crops raised on an individual FSA farm unit are factored together for ARC-IC revenue calculations. All FSA farm units enrolled in ARC-IC in a State are calculated together for IRC-IC determination.

THIESSE, from pg. 16 Key points to remember about the 2022 Farm Program decision

The 2022 reference prices for the PLC program are Corn, $3.70 per bushel; Soybeans, $8.40 per bushel; and Wheat, $5.50 per bushel.

The ARC-CO and ARC-IC benchmark prices for 2022 are Corn, $3.70 per bushel; Soybeans, $9.12 per bushel; and Wheat, $5.50 per bushel.

Final 2022 market year average prices for corn and soybeans will be calculated from Sept. 1, 2022 to Aug. 31, 2023. As a result, the current upswing in crop prices may not necessarily impact final 2022 farm program payments. Final 2022 market year average prices for wheat and other small grains will be calculated from June 1, 2022 to May 31, 2023.

Calculation formulas for the PLC and ARC-CO programs are as follows: The PLC payment per crop base acre is the reference price minus the 2022 market year average price, multiplied by the FSA program yield times 85 percent. (If the final 2022

PLC and ARC-CO Farm Program Comparison Table

2022 Farm Program Sign-Up Deadline is March 15, 2022

PROGRAM DETAILS PRICE LOSS COVERAGE (PLC) AG RISK COVERAGE — COUNTY (ARC-CO)

Base Price • Crop Reference Price. • Reference Prices for 2021: Corn = $3.70 per bushel Wheat = $5.50 per bushel Soybeans = $8.40 per bushel • Benchmark Price. • Higher of the Reference Price or the 5-year “Olympic” average price. (2016-2020 final market year average price) • 2022 Benchmark Prices: Corn = $3.70 per bushel Soybeans = $9.12 per bushel\ Wheat = $5.50 per bushel

Final Price • 12-month national market year average price for 2022-23. Sept. 1, 2022 to Aug. 31, 2023 for corn and soybeans. June 1 to May 31 for Wheat. • Same as for PLC. • 2021-22 market year average price estimate (as of Jan. 1, 2022) Corn = $5.45 per bushel Soybeans = $12.10 per bushel Wheat = $7.05 per bushel

Payment Yield

Payment Revenue • Farm Unit FSA program yields. • County Benchmark Yields. 2022 — Higher of 2014 Farm Bill yields 5-year (2016-2020) rolling “Olympic” or updated FSA yields based on 2013-2017 average. County RMA yield (Trend Adjusted). average farm yields. • Harvest yield is the final county average yield (RMA data).

N/A • Benchmark Revenue = County Benchmark Yield times Benchmark Price • Revenue Guarantee = Benchmark revenue times 86 percent

Payment Acres • 85 percent of Base Acres for an eligible crop. • 85 percent of Base Acres for an eligible crop. Payment Formula • PLC Payment per Base Acre = • ARC-CO Payment per Base Acre = (Reference price minus final market year Revenue Guarantee minus Final County average price) multiplied by FSA yield Revenue (final county yield multiplied by times 85 percent final market year average price times 85 percent • If the final market year average price • If the final County Revenue is higher is higher than the reference price, than the Revenue Guarantee, there is no there is no PLC payment for that crop. ARC-CO payment for that crop. Maximum Payment •(Reference Price minus National Loan Rate) • County Benchmark Revenue multiplied by (Per Crop Base Acre) multiplied by FSA yield times 85 percent 10 percent times 85 percent Payment Limits • $125,000 per individual or entity. • Same as PLC. • $900,000 maximum adjusted gross income on Federal Tax Return. market year average price is higher than the reference price, there is no PLC payment.

ARC-CO benchmark revenue guarantee per acre is the county benchmark yield multiplied by the benchmark price times 85 percent. The final 2022 ARC-CO revenue per acre is determined by multiplying the final 2022 county yield by the final 2022 market year average price. The ARC-CO payment per base acre is the benchmark revenue guarantee minus 2022 final revenue, times 85 percent. If the final revenue is higher than the benchmark revenue, there is no 2022 ARC-CO payment.

Here are some good Farm Program web-based decision tools to assist producers: https://www.ag. ndsu.edu/farmmanagement/farm-bill (North Dakota State University); http://www.agmanager.info/agpolicy/2018-farm-bill (Kansas State University); https://extension.umn.edu/business/farm-bill (University of Minnesota Extension); and https:// farmdocdaily.illinois.edu/category/areas/agriculturalpolicy/farm-bill (University of Illinois).

Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal, Minn. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com. v Soybean prices dive

NYSTROM, from pg. 14

conditions in Brazil and Argentina for the foreseeable future, but bulls need to be fed and without fresh bullish news we could drift from current levels.

For the week, March soybeans gave back over half of last week’s rally with July plunging 40.5 cents to close at $13.69.75, July crumbling 37.25 cents to $13.86, and November fell 28.75 cents to $12.93 per bushel.

Weekly price changes in March wheat for the week ended Jan. 14: Chicago down 17 cents at $7.41.5, Kansas City dropped 30 cents to $7.45, and Minneapolis collapsed 45 cents to $8.78.25 per bushel.

All winter wheat seedings were up 749,000 acres from last year at 34.4 million acres compared to 34.25 million estimated. v

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