Weekly Farm Economics: Considering Low Prices, Yields, and Maximum ARC-CO Payments for 2024

Nick Paulson, Gary Schnitkey, Jonathan Coppess, Jim Baltz and Carl Zulauf

farmdoc daily, 2024, vol. 14, issue 20

Abstract: As noted in recent articles, relatively high historical prices over the 2018 to 2022 marketing years have led to higher ARC benchmark prices for 2024 and, in some cases, PLC effective reference prices above the statutory minimum levels for 2024. For some crops, such as corn and soybeans, the 2024 ARC benchmark price is sufficiently above the effective reference price so that ARC-CO would trigger payments at higher price levels than the PLC program assuming the county yield is at the trend benchmark level in 2024. For other crops, such as wheat, PLC would trigger payments before ARC-CO at trend benchmark yield levels. See farmdoc daily articles from January 16, 2024 and January 23, 2024. Today’s article takes a closer look at 1) price levels where ARC-CO would trigger payments, and 2) price levels where ARC-CO would reach the payment cap, for different county yield outcomes. We also examine how low price levels would need to be for PLC payments to exceed the ARC-CO payment cap, focusing on corn, soybeans, and wheat in Illinois. ARC-CO payments may trigger payments at higher price levels than PLC, particularly for scenarios where county yields are at or below trend benchmark levels. However, if excellent growing conditions occur in 2024, resulting in county yields above benchmark levels, PLC could lead to larger payments at higher price levels than ARC-CO. Moreover, at sufficiently low price levels, PLC payments will exceed those from ARC-CO even if revenue losses occur due to the cap or limit on ARC-CO payments. We encourage producers to examine ARC-CO and PLC payment outcomes for their specific farm situations under different price and yield scenarios using our updated Farm Bill What-If Tool.

Keywords: Agribusiness; Crop Production/Industries; Demand and Price Analysis (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ags:illufd:358280

DOI: 10.22004/ag.econ.358280

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