Farm bill requires choices
"The benchmark revenue for the county is the average revenue determined by multiplying the most recent five-year Olympic average county yield by the five- year Olympic average national marketing year price," Aakre says. "Olympic average refers to dropping the highest and lowest prices and yields and averaging the remaining values. The revenue guarantee is 86 percent of this calculation."
A payment is made if the current year's yield multiplied by the current year's national average market price falls below the revenue guarantee to a maximum of 10 percent of the benchmark revenue. The payment is multiplied by the farm's base acres for that crop times 85 percent to calculate the total payment.
If the ARC-farm option is elected, producers may not utilize PLC for any crops on that farm. All covered commodities produced on that farm unit are pooled to calculate any potential payment. The current year's average revenue for all crops combined is compared with the revenue guarantee for all crops combined.
The payment is made on 65 percent of the base acres and can't exceed 10 percent of the benchmark revenue for that farm.
Price Loss Coverage is the other primary option. With PLC, yields and historical prices don't factor into the calculation of payments. A payment is made for crops enrolled in PLC when the national average marketing year price is below the reference price for that crop.
Reference prices are $5.50 per bushel for all wheat, $4.95 for all barley, $3.70 for corn, $8.40 for soybeans and $3.95 for grain sorghum.
For crops measured in hundredweight, the reference prices are $20.15 for minor oilseeds, $11 for dry peas, $19.97 for lentils, $19.04 for small chickpeas and $21.54 for large chickpeas. Payments are based on 85 percent of the base acres for that crop.
"Program payments for PLC, ARC-county and ARC-farm are all limited by the number of base acres on the FSA farm unit," Aakre says. "Making payments on base acres rather than planted acres lessens the chance of running afoul of the World Trade Organization trade agreement."