March Madness: Did Your County Yield Put You on the ARC-CO Bubble?

With March Madness right around the corner many prognosticators will be talking about teams on the NCAA tournament bubble. In the case of ARC-CO many counties are also on the proverbial program payment bubble. Back in December we had cautioned farmers, bankers, and anyone else interested in farm program payments to wait for the county yields before penciling a large ARC-CO payment into their budgets.   A large portion of that uncertainty was resolved last week when the National Agricultural Statistics Service (NASS) released their initial estimates of the county yields for corn and soybeans. The group at Farm Doc Daily recently used these yields to produce estimates of ARC-CO payments.

Rather than focusing on the size of the payment, we thought it would be interesting to discuss the yield variability across the U.S. and how that will influence the payments. The reason that yields are important is that ARC-CO is a revenue based program. So even if prices are low, yields could theoretically be high enough to produce a situation where the county revenue is above its benchmark.