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FEFO Archive: Farm programs

Possible Per Acre Gross Revenues for Corn in 2015 in Central Illinoi
Gary Schnitkey
FEFO 15-05, 3/17/2015
 

Abstract

Possible gross revenues for corn grown in 2015 are estimated for a Logan County, Illinois farm. The mid-point of 2015 gross revenue range is $828 per acre, $52 below the estimate of total costs for cash rent farmland of $880 per acre. Gross revenue is estimated to exceed $880 per acre 23% of the time.
 
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Base Acre and Yield Updating Tool: A Release of Spreadsheet to Aid in Making Farm Bill Decisions
Gary Schnitkey
FEFO 14-23, 12/9/2014
 

Abstract

The Base Acre and Yield Updating spreadsheet aids in making the first two sets of Farm Bill decisions: 1) base acre allocation and 2) yield updating. It also makes comparisons of expected payments from Agricultural Risk Coverage County Option (ARC-CO) and Price Loss Coverage (PLC) programs calculated by Agricultural Policy Analysis System.
 
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Overview of Commodity Program Decisions from the 2014 Farm Bill
Gary Schnitkey, Carl Zulauf, Jonathan Coppess, and Nick Paulson
FEFO 14-21, 11/18/2014
 

Abstract

This article provides an overview of the commodity program decisions of the 2014 Farm Bill, thereby provide a context for each decision that must be made. More details for each decision are available on the Farm Bill Toolbox
 
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Evaluating the Historical Variability of Corn's Market Year Average Price and Projecting Price Loss Coverage Payments
Gary Schnitkey and Darrel Good
FEFO 14-10, 5/13/2014
 

Abstract

Historical price variability is used to estimate price distributions for future MYA corn prices. Given historical variability and a $4.50 mean, PLC payments are estimated to occur in 9% of the years and have a rate of $.033 per base bushel.
 
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The 2013 Acre Decision
Gary Schnitkey
FEFO 13-07, 4/23/2013
 

Abstract

Farmers and landowners have until June 3rd to enroll their Farm Service Agency (FSA) farms into the Average Crop Revenue Election (ACRE) program, an alternative within the 2008 Farm Bill to the Direct and Counter-Cyclical program (DCP). While ACRE likely will pay less than DCP, enrollment in ACRE may still be advisable as ACRE will make large payments if revenue is low.
 
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Price Loss Coverage in the House Discussion Bill and Acreage Decisions
Gary Schnitkey and Carl Zulauf
FEFO 12-16, 7/12/2012
 

Abstract

The House Discussion Draft of the Farm Bill includes a target price program called Price Loss Coverage (PLC). Parameters of the House Bill cause estimated payments from PLC to be higher for wheat, rice, and peanuts than for corn and soybeans, potentially impacting acreage decisions.
 
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Performance of the Super Committee Target Price Proposal
Gary Schnitkey
FEFO 12-13, 6/5/2012
 

Abstract

An analysis is presented of the target price option contained in the Farm Bill proposal made as part of Super Committee deliberations last year. Frequency of payments will vary across crops because the relationship between the proposed target price and long-run price varies across commodities.
 
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Net Returns with ARC under Differing Price Scenarios
Gary Schnitkey
FEFO 12-12, 5/22/2012
 

Abstract

Net returns including Agricultural Risk Coverage (ARC) payments are examined. At $4.00 per bushel and below corn prices, ARC will make payments, aiding in cushioning revenue losses. However, ARC payments are not large enough is assure profits.
 
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Will Acre Pay in 2011 and 2012?
Gary Schnitkey
FEFO 12-07, 3/13/2012
 

Abstract

ACRE is not likely to make payments on Illinois crops in either 2011 or 2012.
 
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2008 SURE Window Closes September 30
Gary Schnitkey
FEFO 10-16, 9/24/2010
 

Abstract

SURE program deadline is approaching for the 2008 year. Most Illinois farms will not receive payments, but those that do may receive large SURE payments.
 
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Estimated 2009 and 2010 ACRE Payments
Gary Schnitkey
FEFO 10-09, 4/28/2010
 

Abstract

For 2009, state ACRE payments in Illinois are estimated at $27 per acre for corn, $0 for soybeans, and $90 for wheat. For 2010, state ACRE payments are estimated at $41 per acre for corn, $14 for soybeans, and $33 for wheat.
 
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ACRE Payment Estimates: Release of FAST ACRE Payment Estimator
Gary Schnitkey
FEFO 09-19, 12/21/2009
 

Abstract

A new Microsoft Excel spreadsheet has been developed to estimate the amount of Average Crop Revenue Election (ACRE) payments a farm will receive for the 2009 crop.
 
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Crop Priority in ACRE
Gary Schnitkey
FEFO 09-14, 9/18/2009
 

Abstract

Farmers who signed up for the Average Crop Revenue Election (ACRE) can change their crop priority by September 30. Priorty will matter only to farms where planted acres times 1.2 exceeds total base acres.
 
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ACRE Will Likely Pay More than the Traditional Alternative for Receiving Farm Commodity Payments
Gary Schnitkey and Nick Paulson
FEFO 09-12, 8/5/2009
 

Abstract

Based on historical experience for corn, soybean, and wheat acres in Illinois, the ACRE program is expected to generate payments that exceed the direct payments given up to enroll in the program over time. The chance of ACRE payments being triggered for corn, soybeans, and wheat in 2009 is projected to be higher than average.
 
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Historical Analysis of ACRE
Gary Schnitkey and Nick Paulson
FEFO 09-11, 7/20/2009
 

Abstract

We conducted an historical analysis of the Average Crop Revenue Election (ACRE) program using data from 1977 through 2007. This analysis provides indications of: the frequency of ACRE payments, the size of ACRE payments, and the frequency farm triggers are met.
 
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Five-Year Olympic Average Yields and ACRE
Gary Schnitkey
FEFO 09-07, 4/30/2009
 

Abstract

Five-year Olympic average yields will enter into the calculation of eligibility and amount of payments received under Average Crop Revenue Election (ACRE), an option made available in the 2008 Farm Bill for receiving commodity program payments. In this paper, differences in 2009 Olympic average yields across farms are examined using Illinois Farm Business Farm Management (FBFM) yield data.
 
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Questions and Answers About the ACRE Provision of the 2008 Farm Bill
Dale Lattz, Gary Schnitkey and Nick Paulson
FEFO 09-01, 1/9/2009
 

Abstract

This document describes the ACRE program, a choice farmers have for receiving Federal farm commodity payments. This document describes the ACRE program, a choice farmers have for receiving Federal farm commodity payments.
 
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Crop Insurance Decisions in 2005
Gary Schnitkey
FEFO 05-04, 02/28/2005
 

Abstract

Farmers and share-rent landlords have until March 15th to make changes to their crop insurance programs. This article provides an update for making 2005 decisions. Three topics are covered: 1) changes in crop insurance programs in 2005, 2) group product update, and 3) crop insurance considerations given the possibility on soybean rust.
 
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Lower Grain Prices Result in Increased Loan Deficiency Payment Activity for the 2004 Corn and Soybean Crop
Dale Lattz, Gary Schnitkey
FEFO 05-02, 01/31/2005
 

Abstract

Farm bills implemented in 1996 and 2002 contained provisions for nonrecourse marketing assistance loans and loan deficiency payments (LDP's). In essence, these programs place floors under prices that farmers could receive at loan rates. When cash prices are below loan rates, farmers can receive LDPs. Another alternative is to use marketing loan provisions that allow producers (under certain conditions) to take out marketing loans on grain at loan rates. When cash prices are below loan rates, farmers can repay a 9-month nonrecourse commodity loan at less than the loan rate, plus accrued interest and other charges or receive an LDP in lieu of obtaining a loan. In other words, generally speaking, if local cash prices are below the commodity loan rate, producers can receive the difference through either a market loan gain or an LDP. Current loan rates in Illinois for corn, soybeans and wheat average about $2.02, $5.14 and $2.54 respectively. These rates vary by county.
 
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Higher Grain Prices Result In Less Loan Deficiency Payment Activity
Gary Schnitkey, Dale Lattz
FEFO 03-21, 11/11/2003
 

Abstract

The last two farm bills implemented in 1996 and 2002 contained provisions for nonrecourse marketing assistance loans and loan deficiency payments (LDP's). In essence, these programs place floors under prices that farmers could receive at loan rates. When cash prices are below loan rates, farmers can receive LDPs. Another alternative is to use marketing loan provisions that allow producers (under certain conditions) to take out marketing loans on grain at loan rates. When cash prices are below loan rates, farmers can repay a 9-month nonrecourse commodity loan at less than the loan rate, plus accrued interest and other charges or receive an LDP in lieu of obtaining a loan. In other words, generally speaking, if local cash prices were below the commodity loan rate, producers could receive the difference through either a market loan gain or an LDP. If this was the case, most producers took advantage of the program by taking an LDP. Current loan rates in Illinois for corn, soybeans and wheat average about $2.06, $5.16 and $2.59 respectively. These rates vary by county.
 
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Recognizing Income and Budgeting for Counter Cyclical Payments
Gary Schnitkey, Dale Lattz
FEFO 03-16, 08/29/2003
 

Abstract

The counter cyclical (CC) program authorized under the 2002 Farm Bill can make payments for a program year across two calendar years. For example, payments for the 2003 program year can occur in 2003 and 2004. Many farmers prepare financial statements at the end of the year. At year-end 2003, income from the 2003 program year that will be received in 2004 should be recognized on the 2003 income statement, thereby causing a matching of revenue to expenses. At year-end 2003, however, the amount of CC payments that will occur in 2004 will not be known. Not knowing the amount of future CC payments presents difficult in 1) determining how much revenue to recognize on the 2003 income statement and 2) determining the amount of CC payments to include on 2004 cash flow budgets. This newsletter addresses these two issues. Before discussing these issues, the mechanics and timing of CC payments are described because they have direct impacts on revenue recognition and cash flow budgeting.
 
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Options for Determining Base Acres Under the 2002 Farm Bill
Gary Schnitkey
FEFO 02-16, 08/30/2002
 

Abstract

Between October 1, 2002 and April 1, 2003, farmers and landowners will choose one of five options for determining base acres under the 2002 Farm Bill. This choice influences direct and counter-cyclical (CC) payments that will be received for crops grown in 2002 through 2007. The decision also will impact whether the yields used to calculate CC payments can be partially updated (see Updating Acres and Yields Under the 2002 Farm Bill at http://www.farmdoc.uiuc.edu/manage/newsletters/html/fefo02_11.html for further descriptions). The five options are: 1. Retain 2002 Production Flexibility Contract (PFC) acres, 2. Retain 2002 PFC acres and add minimum eligible oilseed acres, 3. Exchange 2002 PFC acres for maximum oilseed acres, 4. Update acres using the average of acres planted or prevented planting from 1998 through 2001, and 5. Exchange existing 2002 PFC acres with less than maximum or more than minimum oilseed acres.
 
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Corn and Bean Acreage in Illinois Under The 2002 Farm Bill
Gary Schnitkey, Dale Lattz
FEFO 02-14, 07/24/2002
 

Abstract

The 2002 Farm Bill alters loan rates such that corn production may become more profitable relative to soybean production. As a result, some Illinois farmers may increase corn acres while they decrease soybean acres. This newsletter analyzes the economics of such a switch by 1) describing features of the 2002 Farm Bill that increase the attractiveness of corn versus soybean production, 2) analyzing costs and returns for growing corn and soybeans under different rotations, and 3) analyzing how corn yields relative to soybean yields affect the decision to switch from soybean acres to corn acres.
 
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2002 Farm Bill Payment Limitations
Dale Lattz, Gary Schnitkey
FEFO 02-13, 07/17/2002
 

Abstract

The Farm Security and Rural Investment Act of 2002 contain provisions limiting the amount of payments a "person" can receive per program year. These limits are $40,000 for direct payments, $65,000 for counter-cyclical payments and $75,000 for loan deficiency payments (LDP's) and marketing loan gains. Farm sizes that cause payments to exceed these limits are illustrated in the following sections. Then, a definition of a "person" is given. This definition along with other entity rules comes directly from the Farm Service Agency (FSA) Fact Sheet "Payment Eligibility and Limitations" (see http://www.fsa.usda.gov/pas/publications/facts/html/payelig01.htm).
 
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Farm Program Payment Comparisons under the 1996 and 2002 Farm Bill
Dale Lattz, Gary Schnitkey
FEFO 02-12, 06/14/2002
 

Abstract

Considerable discussion has arose concerning the level of government expenditures estimated under the recently passed Farm Security and Rural Investment Act of 2002, hereafter referred to as the 2002 Farm Bill, as compared to the 1996 Federal Agriculture Improvement and Reform Act (FAIR), the 1996 Farm Bill. Popular press articles have indicated as much as a seventy percent increase in government payments under the new bill. Generally, these comparisons have not taken in consideration the additional marketing loss assistance payments that have been paid since 1998. This paper looks at provisions contained in the Commodity Title of the new Farm Bill and estimates payments for representative Illinois grain farms for 2001 under the 1996 Farm Bill and the 2002 Farm Bill. Caution must be taken in reviewing the results as these estimates are based on a current understanding of provisions of the new Bill. Final regulations have not been released.
 
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Brief Highlights of the 2002 Farm Bill
Bob Hauser
FEFO 02-11, 06/07/2002
 

Abstract

The 2002 Farm Bill, representing a collection of compromises between the House and Senate Bills, became law on May 13, 2002. It is a six-year bill entitled "Farm Security and Rural Investment Act of 2002."
 
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Updating Acres and Yields Under the 2002 Farm Bill
Gary Schnitkey, Dale Lattz
FEFO 02-10, 06/05/2002
 

Abstract

The Farm Security and Rural Investment Act of 2002, hereafter referred to as the 2002 Farm Bill, includes provisions authorizing direct and counter-cyclical payments for 2002 through 2007 crops. These payments will be determined using base acres and program yields. Farmers and landowners have one-time decisions to make concerning these acres and yields. They either can "update" acres to reflect acres from 1998 through 2001 or they can "not update" and have acres based on those used to calculate Agricultural Marketing Transition Act (AMTA) payments. If base acres are updated, farmers also can update yields used to determine counter-cyclical payments.
 
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Farm Bill 2002: Income Impacts of House Ag. Committee's Proposal
Gary Schnitkey, Paul Ellinger, Dale Lattz
FEFO 01-19, 09/25/2001
 

Abstract

The 1996 Farm Bill -- more formally known as the Federal Agriculture Improvement and Reform (FAIR) Act -- legislates the Agricultural Market Transition Act (AMTA) payments that farmers currently receive. This Bill and its associated AMTA payments will expire at the end of 2002. Sometime between now and early 2003 a new Farm Bill likely will be enacted by Congress. This "2002 Farm Bill" will replace the 1996 Farm Bill.
 
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Government Payments To Illinois Grain Farms
Gary Schnitkey
FEFO 00-03, 12/19/2000
 

Abstract

Federal government payments have shored up net incomes on Illinois grain farms during the extended period of low commodity prices occurring since 1998. This article lists government payments received by crop farms in 2000. Impacts on farm decision-making then are examined.
 
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