2022 Crop Year Decision for Farm Safety Nets

Mar 03, 2022

The Agriculture Improvement Act of 2018–better known as the 2018 Farm Bill–is a piece of legislation that provides a safety net support to farmers who have base acres through the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. Every year farmers must make an election and enrollment decision by March 15 for the upcoming crop year. The current decision is for base acres established in Alabama for the 2022 crop year, which is between June and September.

Effective Reference Price

The first piece of information needed to make a decision on enrollment in ARC or PLC is the Effective Reference Price (ERP). The ERP is used to calculate payments for both PLC and ARC-County (ARC-CO). While the ERP may change in future years based on an established formula, it has not changed since it was created in the 2018 Farm Bill. Table 1 below shows the ERP for crops with base acres in Alabama.

Table 1. Effective Reference Price for 2022 Crop Year

Source: Based on data from USDA FSA as of 12/9/21
Note: Seed cotton is a weighted average price of the cottonseed price and lint price.

Commodity	Marketing Year	Unit	2022 Effective Reference Price
Barley	June 1 - May 31	Bushel	$4.95
Canola	July 1 - June 30	Pound	$0.2015
Corn	Sept. 1 - Aug. 31	Bushel	$3.70
Grain Sorghum	Sept. 1 - Aug. 31	Bushel	$3.95
Oats	June 1 - May 31	Bushel	$2.40
Peanuts	Aug.1 - July 31	Pound	$0.2675
Seed cotton	Aug. 1 - July 31	Pound	$0.3670
Soybeans	Sept. 1 - Aug. 31	Bushel	$8.40
Sunflower seed	Sept. 1 - Aug. 31	Pound	$0.2015
Wheat	June 1 - May 31	Bushel	$5.50

Price Loss Coverage Decision

PLC is a price-based safety net program. Payments are triggered when the national marketing year average price falls below the ERP. To decide whether to choose PLC, one needs to consider the potential this to occur. While professionals do not have a crystal ball to determine prices for next year, there is little indication that prices will be significantly different from the current 2021 crop year. Given this, people can consider what commodities would be eligible for PLC payments for this year. Currently, payments are only projected on peanut base acres, at $60 per ton per acre. No other commodity with base acres in Alabama is expected to yield a PLC payment for the 2021 crop year. The same is expected in 2022 and as peanut contracts have increased this year, the payment rate on those base acres may also further decrease.

Agricultural Risk Coverage – County Decision

The ARC-CO program is a revenue-based program, which is a combination of county yields and the national marketing year average price. Payments are triggered when the revenue falls below the revenue guarantee. This can occur because of a lower yield compared to the benchmark yield, a lower price compared to the benchmark price, or a combination of the two. At the current price levels, with little expectation for lower prices in 2022 crop year, the ARC-CO program is likely to only pay out if yields fall significantly below the county benchmark. Since this is a county-by-county determination, one needs to look at the individual county data. The links to PDF files below contain county level data for consideration.

One will find the benchmark yield, benchmark price, and computed revenue guarantees. Additionally, assumptions are presented to illustrate the point where a minimum or maximum payment rate may be achieved. If one assumes a marketing year average (MYA) price as shown, then the county yield must fall below the specified level to achieve a minimum payment rate. If the county yield fell even further, that would result in a higher payment rate up to the maximum. Alternatively, if one assumes a county yield equal to the benchmark yield, then the MYA price level needed to achieve a minimum payment is shown. It is likely that prices won’t fall to those levels, thus one needs to consider how far county yields would have to fall to trigger a payment at these given price projections.

Implications on Crop Insurance

When making the ARC/PLC decision, one needs to also remember the implications on crop insurance decisions. If the Supplemental Coverage Option (SCO) was chosen for planted crop, those base acres can only elect and enroll in PLC. Crops with ARC enrollment are not eligible for SCO on planted acres. For seed cotton, any enrollment in ARC/PLC is also ineligible for STAX.

Bottom Line

The bottom line for the 2018 Farm Bill safety nets for farmers with base acres is that higher commodity prices are reducing the payment eligibility for the 2022 crop year, to be paid in October 2023. With increasing costs of production, that does not speak to margins that are being squeezed at these higher prices. However, the present structure of these programs is that rising input costs are not considered.

Source : aces.edu

Video: Why Seed Analysts are Thriving Under Seeds Canada

Last month in Edmonton, Alta., industry leaders and stakeholders gathered to discuss the evolving landscape of the seed industry at Seeds Canada’s annual conference. Among them was Sarah Foster, president of 2020 Seed Labs and the new vice-president of Seeds Canada.

Foster, who has been on the board of Seeds Canada for over a year, has witnessed firsthand the challenges and opportunities that come with the formation of the organization. Seeds Canada was established just over three years ago through the merger of multiple seed industry groups, including the Commercial Seed Analysts Association of Canada (CSAAC). Since then, the organization has been working to define its priorities and solidify its role in the industry.

“The challenge has been allowing the dust to settle after the merger,” Foster explained. “We’ve been focused on identifying what our priorities should be and ensuring that our members, especially the seed analysts, are getting what they need to continue their professional work.”

One of the recent highlights was a pre-conference event where the three major seed labs in Alberta — 20/20 Seed Labs, SGS Canada and Seed Check — opened their doors to members. The event saw a record number of seed analysts and business professionals in attendance. Foster emphasized the importance of this transparency, stating, “It’s crucial for people to see what goes on behind the scenes. We’re an open book now, and that openness helps build trust and understanding within the industry.”

The event also featured an environmental scan and a series of discussions that fostered strong communication among attendees. According to Foster, the dialogue was both encouraging and inspiring.

“A lot of people were really inspired by the fact that Seeds Canada is moving ahead with its agenda. The seed analysts, who have always worked diligently in the background, are now being recognized more prominently,” she said.

Before the merger, seed analysts were represented by CSAAC. Now, as part of Seeds Canada, they are finding their place within the larger organization. Foster believes that the integration has been successful, noting, “I think we’re thriving. You only need to look south of the border, where similar consolidations are happening.”

As Seeds Canada continues to evolve, Foster remains optimistic about the future. “I want to be totally transparent with anyone who is a seed analyst — I’ve got your back. We’re moving in a positive direction, and we’ll do everything we can to meet the needs of our members,” she said.