Characteristics of Ohio Women in Agriculture

By: PhD student Rae Ju and Professor Ani Katchova, Farm Income Enhancement Chair, in the Department of Agricultural, Environmental, and Development Economics (AEDE), and Nanette L. Neal and Sarah Noggle, Extension Educators in Agriculture and Natural Resources in the College of Food, Agricultural, and Environmental Sciences Department of Extension at the Ohio State University.

Click here to access the pdf version of the report.

Using data from the 2022 Census of Agriculture, the characteristics of female farmers in Ohio are examined and compared to the overall farming population.

Profile of Ohio Women Farmers

The majority of agricultural producers in Ohio are male farmers, constituting approximately two-thirds of the total, while female farmers represent about one-third. The percentage of female farmers has remained stable, with a minor decrease from 33.6% to 33.1% between 2017 and 2022.

The geographic distribution of female farmers throughout Ohio’s counties was also examined. Counties in Northwest and Southeast Ohio have a lower number of female farmers, with the number of female farmers being less than 500. However, the counties in Southeast Ohio had a relatively high proportion of female farmers, exceeding 33% of the total farming population. In contrast, the counties in Northwest Ohio had a lower percentage of female farmers (less than 33%).

The average age of female farmers in Ohio was 55.4 years, while the average age of male farmers was slightly higher at 56.8 years in 2022. Regarding the age distribution of female farmers, the data suggest a predominant concentration of farmers in the 55-64 age range. In age groups below 55 years old, the percentage of female farmers is slightly higher than that of male farmers. On the other hand, the percentage of male farmers is slightly higher than female farmers for farmers that are 65 or older. Overall, the age distribution pattern is similar for female and male farmers.

The farming occupation and off-farm employment reveal distinct differences between male and female farmers in Ohio. Only 31% of female farmers in Ohio considered farming their primary occupation in 2022, suggesting a reliance on various income sources. Additionally, 40% of female farmers in Ohio were actively involved in off-farm work for over 200 days per year.

Characteristics of Farms Operated by Female Producers

In 2022, there were 40,269 farms operated by female farmers and 72,184 farms operated by male farmers. The average size of farms operated by female farmers was 132.9 acres, in contrast to the larger average of 185.4 acres operated by male farmers. Female farmers were more likely than male farmers to operate farms that are smaller than 50 acres, while the reverse is true for farms greater than 50 acres.

Female farmers in Ohio operate a variety of farm types, including crop production, animal production, and aquaculture. Over half of the farms operated by female producers in Ohio specialized in crop farming. Specifically, 24% of the farms operated by female producers specialized in oilseed and grain, followed by 22% in other crop farming. In addition, 15% of the farms operated by female producers specialized in beef cattle ranching and farming and 14% specialized in aquaculture and other animal production in 2022. Female and male producers are more likely to specialize in crop production than livestock production.  About 55% of farms operated by female farmers in Ohio specialized in crop production which is lower than the 63% of farms operated by male farmers.

Examining land ownership patterns, full ownership was more common among female farmers, with 80% holding full ownership of their operated acres. On the other hand, 17% of female farmers were part owners of the operated acres compared to 26% for male farmers.

Female farmers predominantly appear in the lower sales categories, specifically those with sales under $25,000. Conversely, in the higher sales brackets, the representation of female farmers decreases significantly. Only 9% of female farmers had sales between $100,000 and $499,999, and 6% had sales above $500,000.

Farms with female producers in Ohio had $146,744, while farms with male producers had $213,060 in market value of agricultural products sold and government payments in 2022. Using the USDA’s definition of economic classes, the average market value of products sold from farms operated by female farmers was $145,313 on a per-farm basis. A higher percentage of female farmers than male farmers belonged to the lower economic class, specifically in the category with less than $5,000 in market value of all products sold. In contrast, the distribution pattern for male farmers is the opposite, with a more significant percentage of male farmers than female farmers in the higher economic classes.

References:

United States. (2022). U.S. Census of Agriculture. https://www.nass.usda.gov/AgCensus/

Ohio Farmland Leasing Update webinar is March 1

Northeast Ohio Small Farm Financial to be held in Cortland, Ohio on March 9 and 16

By: Lee Beers, Extension Educator – Trumbull County

Small and beginning farmers in NE Ohio are encouraged to participate in the new in-depth farm management educational program! The college will consist of two Saturday courses to be held on the March 9 and March 16, 2024. Both days will run from 9:00 AM – 3:00 PM with lunch included. Both days will be held at the OSU Extension Trumbull County Office, located at 520 West Main St in Cortland, Ohio. This course will offer 10 hours of farm management education that will help start your farm on the path to financial success.

The college is designed to help landowners examine potential ways to increase profits on their small acreage properties. The program is open to all new or aspiring farmers, new rural landowners, small farmers, and farm families looking for new ideas. During this college, participants will be challenged to develop realistic expectations for their new farm business. They will receive information on getting started, identifying the strengths and weaknesses of their property, and developing a farm business plan. Information on farm finances, insurance, liability, labor, and marketing will be covered during the college.

The cost for the college is $100 per participant, with the option to bring an additional family/farm member for $50. This program also qualifies attendees for the Ohio Department of Agriculture’s Beginning Farmer Tax Credit Program. Those interested in receiving this credit would be subject to additional requirements and fees (More information is available later in this release and online). Those interested in registering for this college, please access: https://osu.az1.qualtrics.com/jfe/form/SV_4HqwjHUs1yJGQx8

More information about the college can be obtained by calling the Trumbull County Extension office at 330-638-6783

 

 

 

 

OSU Extension Launches New Food Business Central Online Course

By Emily Marrison, Assistant Professor and Extension Educator- Family & Consumer Sciences in Coshocton County

Are you a baker ready to sell your home-baked goods? Are you a farmer looking for value-added opportunities for crops you’ve grown or livestock you’ve raised? Are you an entrepreneur aiming to use local agricultural products to make value-added foods? The new Food Business Central online course through Ohio State University Extension can equip you with knowledge and strategies to launch a successful farm-raised or home-based food business in Ohio.

Navigating food regulations, establishing a new business, and applying best practices for food safety can be challenges for food entrepreneurs. “Many people interested in starting a food business aren’t sure where to turn first,” says Emily Marrison, OSU Extension Family and Consumer Sciences Educator and course development team member. “This course is designed to serve as a centralized hub to connect participants to information and resources regarding all types of food products they might want to make and sell.”

OSU Extension experts will help you develop a Food Business Action Plan and learn what you need to start off organized, safe, compliant, and strategic. The self-paced course focuses on several food types including cottage foods and baked goods, canned foods, meat, poultry, eggs, and more. Throughout the course participants will consider key questions and develop action steps to take on their journey to start a food business. As food entrepreneurs complete the course, they will have the answers they need to complete a business plan with help from their local Small Business Development Center. The cost of the course is $25, and registration is at go.osu.edu/foodbusinesscentral .

The development of the Food Business Central online course has been funded through a grant from North Central Extension Risk Management Education. This assistance comes from the United States Department of Agriculture through the National Institute of Food and Agriculture to develop resources that help farmers and ranchers effectively manage risk in their operations. Click here for informational flyer

OSU Extension Farm Office Live to be held on Friday, February 16 from 10:00 to 11:30 a.m.

OSU Extension and the Farm Office Team is pleased to be offering the “Farm Office Live” webinar on Friday, February 16, 2024 from 10:00 to 11:30 a.m.

This month’s webinar will feature the following topics:

  • Ag & Natural Resources State Update
  • Reporting for the Corporate Transparency Acy
  • 2024 Crop Input Outlook
  • OSU Extension’s New Food Business Central Course
  • Legislative Round-up
  • Spring Crop Insurance
  • Farm Bill Update – A Panel Discussion
  • Upcoming Programs

Featured presenters will include: Chris Zoller (OSU Extension Interim State ANR Leader), Robert Moore & Peggy Hall (OSU Ag and Resource Law Program), Barry Ward (OSU Income Tax School Director), David Marrison & Eric Richer (OSU Field Specialists -Farm Management), Emily Marrison (Assistant Professor and Family & Consumer Sciences Educator), Clint Schroeder (Program Manager – Ohio Farm Business Analysis Program) and Brandon Kern (Director of Public Affairs and Issues Analysis- Ohio Soybean Association)

To register for this program (or to access replays of previous programs):

go.osu.edu/farmofficelive

More information about this program can be accessed at farmoffice.osu.edu

OSU Extension to host Eastern – Ohio Small Farm Conference – April 6, 2024 at the Mid – East Career Technical Center Buffalo Campus, Senecaville, Ohio

By: Julie Wayman, Community Development Educator -OSU Extension Ashtabula County

Ohio State Extension announced plans to host a Small Farm Conference in Senecaville, Ohio on April 6, 2024. The theme for this year’s Mid-Ohio Small Farm Conference is “Sowing Seeds for Success.”

Click here to access 2024 Small Conference Brochure

Conference session topics are geared to beginning and small farm owners as well as to farms looking to diversify their operation. There will be five different conference tracks including: Horticulture and Produce Production, Business Management, Livestock, Natural Resources and new this year The Farm Kitchen.  Some conference topic highlights include: Raising Meat Rabbits, Making Goat Milk Soap, Timber Harvesting and Marketing, Basics of Growing PawPaw’s, Food Preservation Basics, Herb Vinegars, Organic Pest Management, Growing Produce with Hydroponics, Starting and Setting up a business, Solar and Wind Leasing.

Anyone interested in developing, growing or diversifying their small farm is invited to attend including market gardeners, farmers market vendors, and anyone interested in small farm living. Attendees will have the opportunity to browse a trade show featuring the newest and most innovative ideas and services for their farming operation. The conference provides an opportunity to talk with the vendors and network with others.

The Conference will take place from 8:30 a.m. – 3:30 p.m. at the Mid – East Career Technical Center – Buffalo Campus located at 57090 Vocational Road Senecaville, Ohio 43780

The registration fee for this all day conference is $100 per person. For conference and registration information call OSU Extension Morrow County 419-947-1070, or OSU Extension Knox County 740-397-0401.

Please follow this link to register for the conference: https://go.osu.edu/2024osusmallfarmconference

 

 

 

 

Commodity Marketing Strategies Workshop scheduled for February 28 in Wayne County

by John Yost, OSU Extension Educator- Wayne County

The Ohio State University Extension – Wayne County, will be hosting a one-day commodity marketing strategies workshop on February 28th for grain, beef cattle, and dairy producers.  Participants will learn: how to write a marketing plan, how to establish price targets, futures and option market pricing strategies, and the use of crop and livestock insurance products to protect against market declines.  The workshop is sponsored by Farm Credit of Mid-America, Gerber Feed Services, and Walnut Hill Feeds.  The program will be held from 8:00 AM to 3:00 PM at the Buckeye Agriculture Museum in Wooster, and costs $20 per participant.  For more information, please visit our website at wayne.osu.edu, or to register call 330-264-8722.

Click here for Commodity Marketing Strategies Program Flyer

Ohio Crop Production and Enterprise Benchmarking for 2022

By: PhD student Xiaoyi Fang and Professor Ani Katchova, Farm Income Enhancement Chair, in the Department of Agricultural, Environmental, and Development Economics (AEDE), and Clint Schroeder, Farm Business Analysis Program Manager, Ohio State University Extension.

Click here to access the pdf version of the report

The Ohio Farm Business Analysis and Benchmarking Program, conducted by the Ohio State University Extension, offers benchmark reports for Ohio farms, summarizing farm business management, particularly in crop production. These reports provide insights on 38 key measures from crop enterprise analysis, covering income, expenses, and efficiency measures. In 2022, the program included 36 corn enterprises and 31 soybean enterprises, allowing participants to compare their performance against similar Ohio enterprises. Benchmark reports are tailored to crop type (corn or soybeans) and land tenure (owned or cash rented). The data on physical production, gross returns, direct and overhead costs, and net returns per acre offers valuable insights to farmers.

Corn and Soybean Production for Owned Land and Cash Rented Land

In 2022, 16 Ohio corn producers with owned land, with an average of 127 acres per enterprise for corn production, had a yield of 191.96 bushels per acre and an average corn value of $5.98 per bushel. This resulted in an average gross return of $1155.89 per acre. For the 20 corn enterprises on cash rented land in Ohio, the average enterprise size was 195.87 with a yield of 188.78 bushels per acre and a corn value of $6.10 per bushel, leading to an average gross return of $1166.69 per acre.

In Ohio, 12 soybean enterprises on owned land operated at an average of 133.47 acres in 2022. They had a gross return of $704.13 per acre, with a yield of 51.43 bushels per acre and an average soybean value of $13.6 per bushel. The 19 soybean enterprises on cash rented land had an average operation size of 279.3 acres. These enterprises earned an average return of $769.33 per acre, with a yield of 55.08 bushels per acre and an average value of $13.79 per bushel.

Direct Expenses of Crop Production

For cash rent corn enterprises, the cost of production for corn was $5.43 per bushel in 2022, including labor and management charges. Direct expenses averaged $807.45 per acre, with around 60% allocated to land rent, seed, and fertilizer.

Likewise, for cash rent soybean enterprises, the cost of production for soybeans was $11.81 per bushel, also including labor and management charges. Direct expenses averaged $520.91 per acre, with around 30% allocated to land rent.

For enterprises with owned land, the cost of production for corn was $5.36 per bushel in 2022, including labor and management charges. Direct expenses averaged $712.29 per acre, with more than half allocated to seed and fertilizer.

Similarly, for soybean enterprises with owned land, the cost of production for soybeans was $11.77 per bushel, also including labor and management charges, with direct expenses averaging $366.74 per acre.

Enterprises with owned land typically incur lower overall production costs per bushel for both corn and soybeans compared to cash rent enterprises. Cash rent enterprises incur higher direct expenses per acre for both crops, primarily due to significant land rent costs. Notably, corn production tends to be less costly per bushel than soybean production for both enterprise types. Land rent is a crucial cost component for cash rent enterprises but is not a direct expense for owned land enterprises.

Government Payments for Crop Production

In 2022, government payments for corn producers on cash rented land averaged $4.09 per acre, while soybean producers received an average of $2.23 per acre.

Government payments for corn producers on owned land averaged $2.47 per acre. Conversely, due to the small sample size, government payments were not reported by the 12 soybean enterprises on owned land.

The Bottom Line of Crop Production

For Ohio’s owned land corn enterprises in 2022, net returns averaged $119.62 per acre, considering all direct, overhead and management expenses, as well as contributions from government payments. Notably, the net returns were lower than those observed in corn enterprises on cash rented land, where the net return over labor and management stood at $127.28 per acre. The net returns for soybeans on owned land were $94.26 per acre, which were lower than the net returns of $109.13 per acre for soybean enterprises on cash rented land.

References:

Schroeder C. and Shoemaker, H. ”2022 Ohio Farm Business Summary.” Ohio State University Extension, September 2023.

Regional Ag Outlook and Policy Meetings Set for 2024

By: Mike Estadt, OSU Extension estadt.3@osu.edu

Ohio State University Extension will present its 2024 Regional Agricultural Outlook and Policy Meetings starting in late January and continuing into February. OSU Extension is the outreach arm of Ohio State’s College of Food, Agricultural, and Environmental Sciences, and the main sponsor of the meetings. Economists from the CFAES Department of Agricultural, Environmental, and Development Economics, Extension specialists in tax policy, ag law and meteorology, along with other college specialists and invited guests, will serve as speakers.

Held throughout the state, the outlook meetings will address agricultural topics of interest not only in Ohio, but across the Corn Belt as well. Programs will include presentations on grain market outlook; the dairy industry; agricultural law updates; Ohio’s changing climate; energy outlook, international economic outlook, farm real estate values and cash rent trends; grain transportation infrastructure; agricultural input price projections; and federal tax updates. Bearish price projections, world conflicts and lower farm income projections make these program important as you plan for the year ahead. University experts and industry representatives will give the latest information on what to expect.  “Outlook meetings have useful take- aways that I have seen farm managers use directly for the upcoming season and planning for the future of the farm business.  Farmers are the CEOs of their farm and collecting unbiased information and putting it into action is essential for success”, according to Bruce Clevenger, Extension Farm Management Field specialist.

Here is a current list of Extension opportunities for ag policy, outlook and grain marketing topics. Check with the local contacts for more information regarding specific topics and times.

January 22, 2024- Friendly Hills Camp and Conference Center, Zanesville, Ohio.

Contact: Clifton Martin (martin.2422@osu.edu)

https://go.osu.edu/2024dinner

 

January 23, 2024- Jewell Community Center, Defiance , Ohio

Contact: Kyle Verhoff (Verhoff.115@osu.edu)

https://defiance.osu.edu/events/2024-farm-outlook-meeting

 

January 23, 2024- Napoli’s Pizza, Belpre, Ohio

Contact: Ed Brown (brown.6000@osu.edu)

https://go.osu.edu/SEcrops

 

January 25th, Plaza Inn, 491 S. Main St. Mt. Victory Ohio.

Contact Mark Badertscher (Badertscher.4@osu.edu)

https://hardin.osu.edu/sites/hardin/files/imce/Tillage%20Club%20Flyer%202024.pdf

 

January 30, 2024, 2022- Emmett Chapel, Circleville, Ohio.

Contact: Mike Estadt (estadt.3@osu.edu)

web: https://go.osu.edu/pickawayoutlook

 

February 6, 2024 Allen County Fairgrounds-Youth Activities Building.

Contact: Nic Baumer (baumer.15@osu.edu)

https://u.osu.edu/allenanr/upcoming-programs/ag-outlook-and-agronomy-day/

 

February 23, 2004- Der Dutchman Restaurant, Plain City, Ohio.

Contact: Wayne Dellinger (Dellinger.@osu.edu) web:

https://go.osu.edu/TriCountyOutlook

 

Farm Doc Provides Look at PLC and ARC-CO Decision for 2024

OSU Extension appreciates permission to cross post this article written by Farm Doc and published on January 16, 2024.
Click here for PDF version of this Article

First Look at PLC and ARC-CO for 2024

by: Nick PaulsonGary Schnitkey, and Ryan Batts Department of Agricultural and Consumer Economics, University of Illinois and Dr. Carl Zulauf, Department of Agricultural, Environmental and Development Economics, Ohio State University

Because the 2018 Farm Bill was extended, farmers will have the same commodity title choices in 2024 as they have since 2019.  These include the Price Loss Coverage (PLC), Agricultural Risk Coverage at the county level (ARC-CO), and ARC at the individual level (ARC-IC) programs. For the first time, the effective reference prices in 2024 for corn ($4.01) and soybeans ($9.26) will be above statutory references prices ($3.70 for corn, $8.40 soybeans). Wheat’s effective reference price will remain at the statutory level of $5.50.  Those effective reference prices are well below 2024 ARC benchmark prices: $4.85 for corn, $11.12 for soybeans, $6.21 for wheat.  As illustrated in the recently updated for 2024 Farm Bill What-If Tool — a Microsoft Excel spreadsheet — ARC-CO will trigger larger payments when county revenues are driven by low yields, while PLC payments may be larger with moderately low prices and higher yields, as well as in scenarios with extremely low prices.

Payments from either PLC and ARC-CO remain relatively unlikely for corn, soybeans, and wheat, even with lower prices expected for 2024.  There is a higher likelihood of ARC-CO triggering payments on corn and soybean base acres given the higher benchmark prices compared with PLC’s effective reference prices. However, PLC may be attractive if an individual is concerned about corn and soybean prices falling below $3.75 and $9.00 per bushel, respectively.  In addition, producers interested in using the Supplemental Coverage Option (SCO) insurance program will want to enroll in PLC.

2024 ARC/PLC Decisions

The recent 1-year extension of the 2018 Farm Bill means that farmers will once again face the March 15th deadline to make a decision between the PLC and county and individual versions of ARC programs offered through the Commodity Title.

  • Price Loss Coverage (PLC) is a crop-specific fixed price support program that triggers payments if the marketing year average (MYA) price falls below the commodity’s effective reference price. Payments are made on 85% of historical base acres (see farmdoc dailySeptember 24, 2019)
  • Agricultural Risk Coverage at the county level (ARC-CO) is a crop-specific county revenue program. ARC-CO triggers payments if actual revenue (MYA price times county yield) falls below 86% of the benchmark revenue (product of benchmark price and trend-adjusted historical yield for the county). Payments are made on 85% of historical base acres (see farmdoc dailySeptember 17, 2019)
  • Agricultural Risk Coverage at the individual level (ARC-IC) is a farm-level revenue support program. Like ARC-CO, payments are triggered if actual revenue falls below 86% of the benchmark. If an FSA farm unit is enrolled in ARC-IC, information for all commodities planted in the current year is combined together in a weighted average to determine benchmark and actual revenues. If a farmer enrolls multiple FSA farms in the same state, all farm units are combined in determining the averages for actual and benchmark revenues. Payments are made on 65% of historical base acres (see farmdoc dailyOctober 29, 2019).

Decisions are made for each Farm Service Agency (FSA) farm unit. PLC and ARC-CO are commodity-specific and can be mixed and matched on the same FSA farm or across different FSA farms (i.e., PLC for one commodity, ARC-CO for another on the same FSA farm or using different programs for the same crop on different FSA farms). High commodity prices in recent years have implied low likelihoods of payments (see farmdoc dailyJanuary 24, 2023). The likelihood of payments being triggered remain low for 2024. However, lower projected prices for corn, soybeans, and wheat in 2024 combined with higher prices now impacting effective reference and benchmark price calculations increase the likelihood of payments and introduce additional uncertainty into the program decision for 2024.

Effective Reference Prices for 2024

The effective reference price levels for 2024 are set at the higher of: 1) a crop’s statutory reference price, or 2) 85% of the Olympic average of prices over the 5 marketing years from 2018 to 2022. The Olympic average is computed as the simple average of the 3 remaining prices after eliminating the low and high price over the 5 years considered. If applicable, the effective reference price is capped at 115% of a crop’s statutory reference price.  Effective reference price calculations for corn, soybeans, and wheat in 2024 are summarized in Table 1.

The 2024 effective reference prices for both corn and soybeans are above the minimum statutory levels due to multiple years of prices sufficiently larger than the statutory reference prices for both crops from 2018 through 2022.

For corn, 85% of the average of the MYA prices for 2018, 2020, and 2021 are used in computing the $4.01 effective reference price.  For soybeans, 85% of the average for the MYA prices for 2019, 2020, and 2021 are used to set the $9.26 effective reference price.

National MYA prices for wheat have also been higher in recent marketing years, but not enough to result in an increase in the effective reference price for 2024. For wheat, 85% of the average of MYA prices in 2018, 2020, and 2021 is $5.05 resulting in the effective reference price being set at the statutory level of $5.50 for wheat in 2024.

ARC Benchmark Price Calculations

ARC program benchmark prices for each commodity are based on the Olympic average of the 5 prices used in the benchmark calculation.  Prices used are the larger of the crop’s effective reference price for the current year (2024 in this case) and the actual MYA prices over the 5 preceding marketing years with a single year lag (i.e. 2018 to 2022 for the 2024 program year).  Higher prices in recent marketing years, along with the use of the effective reference prices as minimums for each year used in the calculation for corn, soybeans, and wheat results in an increase in the ARC benchmark prices for 2024 compared with 2023 and earlier years. Table 2 summarizes the ARC benchmark price calculation for corn, soybeans, and wheat.

For corn, the actual marketing year average prices in 2018 and 2019 are replaced by the 2024 effective reference price of $4.01, while the actual MYA prices for 2020, 2021, and 2022 are used.  Taking the Olympic average of the 5 prices used for corn results in an ARC benchmark price of $4.85 per bushel. The ARC benchmark calculation for soybeans also replaces the actual MYA prices in 2018 and 2019 with the $9.26 effective reference price to arrive at an ARC benchmark price of $11.12 per bushel for soybeans in 2024.  Wheat’s benchmark calculation involves replacing the actual MYA prices with the $5.50 reference price in 3 of the 5 years (2018, 2019, and 2020) and results in an ARC benchmark price of $6.21 per bushel for wheat in 2024.

Notably, the ARC benchmark prices are all above the effective reference prices for each of the three crops. ARC-CO guarantees 86% of a county’s benchmark revenue, which implies that payments would be triggered when prices fall below 86% of the benchmark price assuming normal yields at the trend benchmark level for the county.  These trigger price levels are $4.17 for corn (0.86 x $4.85), $9.56 for soybeans (0.86 x $11.12), and $5.34 for wheat (0.86 x $6.21).  These trigger prices for corn and soybeans also exceed their respective effective reference prices, suggesting ARC-CO is more likely to trigger payments than PLC.  For wheat the trigger price is below the $5.50 reference price, meaning a larger price decline will be needed to trigger ARC-CO payments than for PLC payments on wheat assuming yields at benchmark levels in 2024.

ARC-CO Benchmark Yield Calculations

The ARC-CO program uses a county specific benchmark yield based on the higher of actual county yields and 80% of the county T-yields used for crop insurance over the 5 preceding crop years with a year lag (2018 to 2022 is used for the 2024 program year).  A county-specific trend adjustment is then added to each year’s ARC-CO yield, resulting in a 5-year history of trend-adjusted ARC-CO yields.

The 2024 benchmark yield calculation for corn in Champaign County, Illinois is provided in Table 3. Actual yields for Champaign County are used for all 5 years.  The trend adjustment factor for Champaign County is 1.97 bushels per acre per year.  Each of the historic yields is adjusted up to a 2024 trend-adjusted yield.  For example, the 2018 actual yield of 235.6 bu/acre is adjusted up by 11.8 bu/acre (6 years x 1.97 bu/acre/year) to a 2024 trend-adjusted yield of 247.5 bu/acre.  The Olympic average of the trend-adjusted yields gives the 2024 ARC-CO benchmark yield of 224.8 bu/acre for Champaign County, Illinois.

PLC and ARC-CO Payments in 2024

We briefly summarize payment calculations for the PLC and ARC-CO programs here.  More detailed explanations are provided in the farmdoc daily articles from September 17, 2019 and September 24, 2019.

PLC payments will be triggered if the 2024 MYA price is below the effective reference price.  Payments for corn would be triggered at prices below $4.01 per bushel. Payments for soybeans would occur at prices below $9.26 per bushel. Payments for wheat would occur at prices below $5.50 per bushel.  PLC payments cover the price gap between the higher of the crop’s actual MYA price and its loan rate and the commodity’s effective reference price multiplied by the PLC payment yield for the farm and paid on 85% of the farm’s base acres.

For example, if the 2024 MYA price for corn is $3.81 the PLC program would trigger payments at a rate of $0.20 per bushel ($4.01 – $3.81 = $0.20).  A farm with a PLC payment yield of 180 bushels per acre would receive a payment of $30.60 per base acre (0.85 x $0.20 x 180 = $30.60).

ARC-CO payments are triggered if actual county revenue falls below the ARC-CO guarantee.  Payments equal the revenue shortfall, capped at 10% of benchmark revenue, paid on 85% of the farm’s base acres.  Actual revenue is the county’s actual yield times the national MYA price. The ARC-CO guarantee is 86% of the product of the ARC-CO price and yield benchmarks. Using corn in Champaign County, Illinois as an example, actual revenue for 2024 would need to fall below $937.81 per acre (0.86 x 224.8 x $4.85).

A 2024 MYA price of $3.81 and a Champaign County corn yield of 225 bu/acre would trigger an ARC-CO payment of $69 per base acre ($937.81-$856.64 = $81.17 x 0.85 = $68.99). A $4.50 MYA price and a Champaign County yield of 205 bu/acre in 2024 would trigger a $13 ARC-CO payment ($937.81 – $922.50 = $15.31 x 0.85 = $13.01).

2024 ARC/PLC What-If Tool

An updated 2024 version of the Excel-based Farm Bill What-If Tool is now available, and can be directly downloaded here. The calculator can be used to compare payment scenarios for the PLC and ARC-CO programs for individual farm scenarios.  The tool provides a tabular comparison of PLC and ARC-CO payments across a range of MYA price and county yield levels.  An example for corn in Champaign County, Illinois is provided below in Figure 1.

The prices across the columns are centered at $4.50 per bushel, the current price projected for the 2024 marketing year used in the January revision to the farmdoc Crop Budgets and consistent with USDA’s current forecast. Yields in the rows are centered at 225 bu/acre, the 2024 ARC-CO benchmark yield for Champaign County.

PLC payments would begin to be triggered at a MYA price for corn of $4.01.  ARC-CO payments would be triggered at any combination of an MYA price and county yield for corn that resulted in revenue below Champaign County’s ARC-CO guarantee of $937.81.

The zero values in the table in Figure 1 are for MYA prices which exceed $4.01, and price and yield combinations which exceed a revenue of $937.81 resulting in no payments from PLC or ARC-CO.  Positive values in green in the table in Figure 1 indicate that the size of PLC payments at that price level would exceed the ARC-CO payment, if applicable, for that price and yield combination.

For example, with a MYA price level of $3.75 and Champaign County corn yield of 250 bu/acre, the PLC payment would be $40 per base acre and no ARC-CO payment would be triggered, resulting in a $40 per base acre payment advantage for PLC. At a MYA price of $4.00 and county yield of 215 bu/acre, PLC would trigger a payment of less than $2 per base acre while ARC-CO would trigger a $66 payment resulting in an ARC-CO advantage of nearly $65 per base acre.

PLC will tend to result in larger payments when prices are sufficiently low to trigger PLC payments and county yields are sufficiently high to trigger low or zero ARC-CO payments. PLC also results in larger payments when prices are extremely low, regardless of yield outcomes, as ARC-CO payments begin to be capped at 10% of benchmark revenue.  Examples of these scenarios can be seen in the first column of the table in Figure 1 where the MYA price is $3.25. Even at the 250 bu/acre county yield level shown in the first row, ARC-CO payments would hit the cap of $93 per base acre for Champaign County (0.85 x 0.10 x 224.8 x $4.85 = $93).  At a $3.25 MYA price and 180 bu/acre PLC payment yield the PLC payment would be $116 per base acre, resulting in the $24 per base acre payment advantage for PLC shown in the first column for all reported yields.

ARC-CO payments exceed those for PLC when county yields are sufficiently low and when prices are moderately low relative to the benchmark and effective reference prices.  These scenarios can be seen by the negative values shaded in red in the table in Figure 1. For example, at an MYA price of $4.25 PLC payments would not be triggered, but ARC-CO would begin to trigger payments at a county yield level of around 220 bushels per acre. At prices of $4.00 or lower, there are price and yield combinations where both programs would trigger payments but ARC-CO payments would be larger than those from PLC.  For example, at an MYA price of $3.75 and a county yield level of 225 bu/acre the PLC payment would be $40 per base acre while the ARC-CO payment would be $80 per acre, a $40 per base acre payment advantage for ARC-CO.

Conclusions

Higher prices in recent years have resulted in higher PLC effective reference prices for corn and soybeans in 2024 as well as higher ARC program benchmark prices.  While wheat’s reference price will remain at the statutory level of $5.50 for 2024, higher MYA prices are now also factoring into the ARC benchmark price calculation for wheat.  With lower prices projected for 2024, the likelihood of triggering ARC and PLC payments is higher than in the past few years but remains relatively low.

The updated Farm Bill What-If Tool can be used to compare payment scenarios for the PLC and ARC-CO programs for 2024, aiding in the commodity program decisions producers must make by March 15th.

ARC-CO will trigger larger payments when sufficiently large yield losses occur and/or prices are not sufficiently below the effective reference price. Given the ARC benchmark prices for 2024, ARC-CO payments have a higher likelihood of being triggered than PLC for corn and soybean base acres.

PLC will trigger larger payments when prices fall below a commodity’s effective reference price.  PLC payments would exceed ARC-CO payments in scenarios where yields are not sufficiently low to trigger large ARC-CO payments.  PLC also has an advantage in very low price scenarios where ARC-CO payments hit the 10% of benchmark revenue cap.

Beyond direct payment comparisons, other considerations may enter a producer’s commodity title decision.  One example is the interaction between commodity program choice and eligibility to use the Supplemental Coverage Option (SCO) insurance program. Producers wanting to use SCO will need to make sure those acres are enrolled in PLC.  ARC-IC should also be considered as an option.  The farmdoc daily article from October 29, 2019 lays out situations where producers may consider ARC-IC.

Future articles leading up to the March 15th commodity program and crop insurance deadlines will further analyze factors that may influence producers’ decisions for 2024.

References

Paulson, N. and G. Schnitkey. “Revised 2024 Crop Budgets.” farmdoc daily (14):6, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 9, 2024.

Schnitkey, G., J. Coppess, N. Paulson, C. Zulauf and K. Swanson. “The Agricultural Risk Coverage — County Level (ARC-CO) Option in the 2018 Farm Bill.” farmdoc daily (9):173, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 17, 2019.

Schnitkey, G., C. Zulauf, K. Swanson, J. Coppess and N. Paulson. “The Price Loss Coverage (PLC) Option in the 2018 Farm Bill.” farmdoc daily (9):178, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 24, 2019.

Schnitkey, G., R. Batts, C. Zulauf and N. Paulson. “2023 Commodity Title Choices: ARC-CO and PLC.” farmdoc daily (13):13, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 24, 2023.

Zulauf, C., B. Brown, G. Schnitkey, K. Swanson, J. Coppess and N. Paulson. “The Case for Looking at the ARC-IC (ARC-Individual) Program Option.” farmdoc daily (9):203, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 29, 2019.

Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. Guidelines are available here. The farmdoc daily website falls under University of Illinois copyright and intellectual property rights. For a detailed statement, please see the University of Illinois Copyright Information and Policies here.

Recommended citation format:
Paulson, N., G. Schnitkey, R. Batts and C. Zulauf. “First Look at PLC and ARC-CO for 2024.” farmdoc daily (14):11, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 16, 2024.