ARC-IC and Illinois Tool
I hadn’t been considering ARC-IC for many situations as it seemed like one had to have 100% prevent plant in 2019 in order for it to trigger. However, I received enough calls from those with hail damage in 2019 to take another look at this.
Purdue University put together a great video that explains ARC-IC and situations where ARC-IC may trigger (two examples listed below). Check it out here: https://youtu.be/AwCMySwjWT4.
If you had the following two situations, it may be beneficial to check out ARC-IC.
- 100% prevent plant for 2019
- Planted entire farm but 2019 yields were below average (20% or more production loss)
NOTE: You will need to have worked through your 2013-2017 yields and also 2019 yields in order to look at ARC-IC. Yields for each crop need to be combined for irrigated and non-irrigated (blended yield) by year. If you have several tracts within a farm number, all the yields for same crop regardless of irrigation practice need to be combined by year. Doing this also allows you to look at any potential to update PLC yields.
The Texas A&M tool doesn’t allow one to look at ARC-IC. I realize I haven’t recommend the Illinois tool. However, they created a second tool (2018 Farm Bill What if Tool) and I apologize as I hadn’t been back to their site since December to see this. The first tool looks at the life of the farm bill and I felt it wasn’t as accurate because this is a 2 year decision instead of 5 year. However, the second tool looks at 2019-2020 and it also is very helpful when considering ARC-IC for single or multiple farms. This blog post will hopefully help you work through the Illinois “What If” tool for considering ARC-IC found at https://farmdoc.illinois.edu/2018-farm-bill.
I recommend using the ‘2018 Farm Bill What if Tool’. Download the tool and it will appear as an excel spreadsheet. Enable editing.
At the bottom of the spreadsheet, you will see multiple tabs. Click on “arc-ic” if you’re interested in looking at only 1 farm number. The yellow boxes within the sheet contain either dropdown menus or can have data entered into them. Use the dropdown menus to select State, County, Number of crops, Crop (be patient and wait as it will think before changing the cell). Select “yes or no” from dropdown regarding which years the crop was planted and enter in the yield for that year for that crop. Remember the yield is the blended yield of irrigated/non-irrigated and for every tract within a farm number. Do this for each crop. *Note, in this example, the 2013 hail storm in this same area of the State also impacted yields.
This shows the calculations. When the crop wasn’t planted, the county yield is used. When the yearly yield is less than the County Yield, 80% of the T-Yield is automatically used. The yields are then multiplied by the higher of the market year average price or effective reference price to determine benchmark revenues. An Olympic Average (throw out high and low then average the other three revenues) is then determined for each individual crop.
For ARC-IC, the total base acres get combined together. So if there were 92.8 total base acres for the farm, and the other crop wasn’t planted, I put the total base acres into the crop that was planted. If both crops were planted, I split the base acres and entered the 2019 yields for each crop. If the farm was 100% prevent plant or had some portion of farm in prevent plant, make sure to designate those acres as such. I have been seeing this trigger for hail or other impacts to yield for 2019 if the loss was at least 20% of the 2013-2017 yields. In this case, the grower could receive a pretty substantial payment of around $47/base acre for 2019. Even if there’s no payment for 2020, this type of payment for 2019 far exceeds what is expected for potential payments from either ARC-CO or PLC at this time.
So what if you had more than one farm in a significant hail damaged area? You can also use this tool to look at multiple farms.
In the spreadsheet tab select “arc-ic-multi”. Select your state from drop-down menu. Then select how many farms you’re interested in looking at arc-ic and the crops. Be patient as it takes time for the tool to change cells. Then enter in your data for each farm. You will need to enter the total number of FSA base acres for that farm number (it’s not split by crop).
Once all the farm yields are entered, you can look at potential payments for individual farms by simply selecting “yes or no” in the expected payments portion at the end of the spreadsheet. You can also see what happens to potential payments when you select “yes” on multiple farms. Note: for all farms enrolled in ARC-IC, all the base acres will be combined regardless of crop and regardless of farm number to determine payment per base acre and payment will be applied to 65% of total base acres.
This is very farm and situation dependent. If several farms are within one farm number and one farm had significant loss but the other(s) didn’t, it may not trigger ARC-IC. Same thing for prevent plant acres (if a portion of farm is planted and part is prevent plant, the yield of planted acres may result in too much revenue to trigger ARC-IC).
Situations where ARC-IC tends to trigger best are:
- When there’s one farm within one farm number and that farm either went 100% prevent plant or had a yield loss of 20% or greater for 2019.
- When there’s several farms within one farm number but all had 100% prevent plant and/or significant yield losses in 2019.
Hopefully this is helpful if you’re considering ARC-IC!
Additional Farm Bill Info:
Posted on March 6, 2020, in Farm Bill and tagged arc-ic, farm bill. Bookmark the permalink. Leave a comment.
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