Analyzing the New Farm Safety Net Jonathan Coppess University of Illinois

A Difficult Farm Bill’s Challenges What were the options for farmers? How best to make a five-year choice filled with unknowns? What did farmers decide and why? What is the initial feedback on the decision and programs?

Farm Program Decision ARC-CO PLC ARC-IC County level revenue 5yr Olympic Averages PLC Fixed-price triggers Deficiency payments ARC-IC Individual whole-farm revenue 5yr Olympic averages of all covered crops

Sorting Out The Farm Program Decision McLean Co., IL: ARC-CO vs. PLC (160 bu. yield)

Farm Program Decision FarmdocDaily, June 16, 2015

Farm Program Decision—Corn ARC-CO: 91% of farms; 93% of base FarmdocDaily, August 14, 2015

Farm Program Decision—Soybeans ARC-CO: 96% of farms; 97% of base FarmdocDaily, August 14, 2015

PLC’s Realities Commodity Reference Price 2014 MYA Price Payment Rate Corn $3.70 $0 Soybeans $8.40 $10.10 Wheat $5.50 $5.99 Peanuts $535/ton $440/ton $95/ton L.G. Rice $14.00 $11.90/cwt $2.10/cwt M.G. Rice $14.40/cwt $0/cwt T.J. Rice $16.10 $21.40/cwt Grain Sorghum $3.95 $4.03

Feedback & Issues: Revenue’s Realities County average yields are a factor in program, especially in high-yield years like 2014 Farmers had to consider this in the decision; difficult to make straight comparison with price-only PLC

Feedback & Issues: Revenue’s Realities With FSA yields and $3.70 MYA price, estimated ARC-CO payments on corn Yields had significant impact on payments for corn.

Feedback & Issues: A Tale of Two Counties McLean County, IL (2014) -Yield = 218 bu/acre -MYA = $3.70 -Program Yield = 165 bu. -Estimated ARC-CO = $0/base acre -Estimated PLC = $0/base acre DeKalb County, IL (2014) -Yield = 196 bu./acre -Estimated ARC-CO = $62.07/base acre

Feedback & Issues: Revenue’s Realities ARC-CO for soybean base with FSA yields and $10.10 MYA price Yields were again the determining factor for payments given a $12.27 per bushel benchmark price for ARC-CO

Feedback & Issues: Revenue’s Realities ARC-CO on wheat with FSA yields and $5.99 MYA price Reference price at $5.50 and benchmark price at $6.60; yields were again determining factor on payments

2014 ARC-CO and PLC Payments

ARC-CO vs. PLC in 2014 Commodity PLC Payments ARC-CO Payments Base in Program Per Base Acre Peanuts $283,878,099 2,013,443 $141 Long Grain Rice $308,627,163 4,007,809 $77 Corn $3,283,483,819 90,057,276 $36 Wheat $307,140,098 35,394,613 $9 Soybeans $282,478,906 52,635,553 $5

Feedback and Issues: Revenue vs. Price Reference price compared to the five-year Olympic average price. Trade-offs between high yields and low(er) prices. The unknown future. Commodity Reference Benchmark Corn (bu.) $3.70 $5.29 Soybeans (bu.) $8.40 $12.27 Wheat (bu.) $5.50 $6.60 Rice (cwt) $14.00 $14.17 Peanuts (ton) $535 $557.40

Farm Program Decision Conclusions Adding risk and complexity to risk management. Decisions still follow the (expected) payments. Strong acceptance of revenue-based assistance.

Web Tool Usage—Farm Bill Toolbox Google Analytics Total Hits (thru July): 1,917,149

Web Tool Usage: APAS Google Analytics

Follow-Up on Program Decisions & Tools Further Analysis of Web Tool Usage and FSA Election Data Farmer/Landower Survey Analysis of Web Tool Usage, Election Data and Survey Responses

Thank You! jwcoppes@Illinois.edu Questions? Thank You! jwcoppes@Illinois.edu