Farm Bill

USDA announces final 2016 Price

USDA announces final 2016 Price

By Tim Kelleher, Rice Lawyers, Inc.

On January 31, the USDA Farm Service Agency announced the marketing year average (“MYA”) price for temperate japonica rice (California short/medium grain rice).  While all prior projections out of USDA estimated the price at $13.70/cwt, the 2016 MYA was set at $14.10/cwt.

For the PLC program, the calculation of payments on each farm are simple: ($16.10 – $14.10) x PLC program yield x temperate japonica base acres x .85 x producer’s share of those acres.

For the ARC-CO, the producer uses the county average yields, comparing historical to current, and historical prices (averages are computed as Olympic Average – drop the high and low and divide by 3).  Average yield times average price produces a “benchmark” revenue figure.  The guarantee is 86 percent of that figure.  Then, the current county yield is multiplied by MYA and the difference is the payment rate per acre.  This payment rate cannot exceed 10 percent of the benchmark revenue, which will apply in 2016.  The payment rate is the multiplied by the temperate japonica base acres x .85 x producer’s share of those acres to compute the payment.  ARC-IC goes through the same calculations based on the individual producer’s yields.

My calculations show a payment generally in the $140-$145/base acre (not 85 percent) range.  I also can finally say that, at least in some counties, ARC-CO payments are greater than PLC payments.

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