Farm Bill

Tim Kelleher analysis of PLC and ARC-CO Payments

Tim Kelleher analysis of PLC and ARC-CO Payments

PLC payments are simple to calculate; multiply the farm’s PLC program yield by the difference between the national average farm price and $16.10.  For every $0.01 the NAFP goes below $16.10, the payment rate/cwt goes up by $0.01.

ARC-CO payments are more difficult to calculate.  First, you have to look at the county’s Olympic average yield.  Then the California medium/short grain Olympic average yield is computed.  These two averages are multiplied to get the Benchmark Revenue.  The Benchmark Revenue is then multiplied by a factor of 86 percent.  In other words, there’s a 14% deductible that cannot be recovered.  The 86 percent product is the Agricultural Risk Coverage Guarantee.  This amount is compared to the product of the current year’s county average yield times the current year’s NAMP.  The payment will be the difference between the Benchmark Revenue and the current year’s calculated revenue (average county revenue, NOT the producer’s revenue).  This amount, however, cannot exceed 10 percent of the Benchmark Revenue.

The attached table shows payments under these two programs at the current low prices, starting at $13.00 and increasing to $16.30, the point at which payments under both programs go away.  The assumptions for these calculations are a PLC program yield of 80 cwt, a current year’s county average yield of 92 cwt., and the Butte County Olympic Average Yields.

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