2014 farm bill commodity/crop insurance programs: wheat and grain sorghum
DESCRIPTION
2014 Farm bill COMMODITY/Crop Insurance programs: Wheat and Grain Sorghum. Dr. Jody Campiche Department of Agricultural Economics Oklahoma State University. Disclaimer. This information is based on my understanding of the 2014 farm bill - PowerPoint PPT PresentationTRANSCRIPT
2014 FARM BILL COMMODITY/CROP INSURANCE PROGRAMS:
WHEAT AND GRAIN SORGHUM
Dr. Jody Campiche
Department of Agricultural Economics
Oklahoma State University
Disclaimer
This information is based on my understanding of the 2014 farm bill
Some details may be slightly different once the final rules and regulations are released
This information is intended to be for educational purposes only
Commodity/Crop Insurance Programs
ARC-C
SCO
PLC
CROP INSURANCE
COMMODITY PROGRAMS
ARC-I
RP, YP, RP-HPE
Commodity Program/Crop Insurance Choices
PLC
PLC + SCO
ARC-County
ARC-Individual
RP, RP-HPE, YP Changes?
ARC/PLC paid on 85% of base acres SCO paid on 100% of planted acres
No premium for ARC/PLC Premium for SCO
Payment limits for ARC/PLC No payment limits for SCO
ARC limited to 10% of benchmark revenue SCO/PLC payments can be higher than ARC
Important Points
SCO not available for all crops for 2015
Some producers have base but are not planting a crop
Some producers have a higher level of coverage on their individual policy so SCO is less attractive
Some producers plant more than their base so SCO may be more attractive
Important Points
PLC Reference Prices FAPRI/WASDE Price Projections
Crop PLC Reference Price
Grain Sorghum
3.95
Wheat 5.50
August 2014 Price Projections - Wheat
2014/15 2015/16 2016/17 2017/18 2018/19
FAPRI $6.27 $5.73 $5.72 $5.79 $5.87
USDA WASDE
$5.80-$6.80
August 2014 Price Projections - Sorghum
2014/15 2015/16 2016/17 2017/18 2018/19
FAPRI $3.63 $3.90 $3.93 $3.96 $4.02
USDA WASDE
$3.30-$4.00
Sorghum PLC Payments assumingFAPRI/WASDE Price Projections
PLC Projected Payments – Sorghum (FSA payment yield = 45)
2014/15 2015/16 2016/17 2017/18 2018/19
PLC $14.40 $2.25 $0.90 $0 $0
PLC-85% of base adj.
$12.24 $1.91 $0.77 $0 $0
August 2014 Price Projections - Sorghum
2014/15 2015/16 2016/17 2017/18 2018/19
FAPRI $3.63 $3.90 $3.93 $3.96 $4.02
USDA WASDE
$3.30-$4.00
Wheat PLC Payments assumingFAPRI/WASDE Price Projections
August 2014 Price Projections - Wheat
2014/15 2015/16 2016/17 2017/18 2018/19
FAPRI $6.27 $5.73 $5.72 $5.79 $5.87
USDA WASDE
$5.80-$6.80
PLC Projected Payments – Wheat (FSA payment yield = 40)
2014/15 2015/16 2016/17 2017/18 2018/19
PLC $0 $0 $0 $0 $0
PLC-85% of base adj.
$0 $0 $0 $0 $0
ARC Benchmark Prices
Wheat
YearMYA Price
ARC Price
Oly Avg
2009 4.87 5.50 2010 5.70 5.70 2011 7.24 7.24 2012 7.77 7.77 2013 6.87 6.87 2014 6.27 6.27 6.602015 5.73 5.73 6.792016 5.72 5.72 6.792017 5.79 5.79 6.292018 5.87 5.87 5.93
Sorghum
YearMYA Price
ARC Price
Oly Avg
2009 3.22 3.95 2010 5.02 5.02 2011 5.99 5.99 2012 6.33 6.33 2013 4.25 4.25 2014 3.63 3.95 5.092015 3.90 3.95 5.092016 3.93 3.95 4.732017 3.96 3.96 4.052018 4.02 4.02 3.95
*If MYA price < reference price, replace with reference price*Wheat reference price = $5.50, Sorghum reference price =$3.95
Wheat
Which Program to Choose?
Wheat ARC may trigger for wheat in many counties in the
Southern Plains for 2014/15 if the county has a yield loss Payments will not be large (likely < $20/acre)
PLC will likely not trigger in 2014/15 for wheat
Producers who are concerned about price declines over the life of the farm bill and a stronger overall safety net may want to elect PLC (and add SCO) SCO is not available for the 2014/15 crop year
SCO Decision Tool – 70% RPFAPRI Projected Prices for Wheat
SCO Decision Tool – 75% RPFAPRI Projected Prices for Wheat
SCO Decision Tool – 80% RPFAPRI Projected Prices for Wheat
SCO Decision Tool – 70% RP2015 Wheat Price = $5.00
ARC vs. PLC 2014/15 Wheat
Art Barnaby’s Spreadsheet
Sorghum
Which Program to Choose?
Sorghum ARC may trigger in some counties in the Southern Plains
for 2014/15 Maximum payments could range from $22-$35/acre (depending
ARC county yields)
PLC may trigger in 2014/15 for sorghum if the price < $3.95
Producers who are concerned about price declines over the life of the farm bill and a stronger overall safety net may want to elect PLC (and add SCO)
SCO is not available for the 2014 crop year
SCO Decision Tool – 70% RPFAPRI Projected Prices for Sorghum
SCO Decision Tool – 70% RP2015/16 Sorghum Price = $3.22
ARC vs. PLC 2014/15 Sorghum
Art Barnaby’s Spreadsheet
ARC vs. PLC 2014/15 Sorghum
Art Barnaby’s Spreadsheet
OSU Farm Policy Website
• Simple SCO/ARC/PLC decision tool for winter wheat• OSU/KSU Decision Tool – available soon• Joint effort: • Jody Campiche & Eric DeVuyst – OSU• Art Barnaby & Mykel Taylor – KSU• Partially funded by SRMEC
• Other videos, newsletters, etc…
www.agecon.okstate.edu/agpolicy/farm_2014.asp
