November 25, 2015

Understanding ARC-CO: Transition Assistance vs. Support Assistance

The Agriculture Risk Coverage - County (ARC-CO) program was elected for 93% of corn base acres, 97% of soybean base acres, and 56% of wheat base acres. ARC-CO differs from previous farm programs, most importantly because it replaces traditional support assistance, in part, with transition assistance. Understanding the transition and support components of ARC-CO is a key to maximizing its value to managing a farm over time.

  • Authors: Carl Zulauf and Gary Schnitkey
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November 24, 2015

Estimates of 2015 ARC-CO Payments

Many farmers will place estimates of 2015 Agricultural Risk Coverage - County Option (ARC-CO) payments on the 2015 income statement as revenue, resulting in an accrued ARC-CO payment on their balance sheets. Having a reasonable estimate of ARC-CO payments will aid in these income and balance sheet valuations. At this point, there is a great deal of uncertainty about 2015 ARC-CO payments. Still, it seems reasonable to expect some level of 2015 ARC-CO payments. An estimate of $50 per base acre averaged over corn and soybeans seems reasonable at this point, with the caveat that there will be ARC-CO payment variability across counties.

November 23, 2015

Weekly Outlook: Hog Prices Drop to 6 Year Lows

Live hog prices fell below $40 per hundredweight last week. This means hog prices are at their lowest level since November of 2009 when the U.S. was just beginning to pull off the bottom of the great recession. The source of the current downturn in prices seems to have components from both supply and demand.

November 20, 2015

Machinery Capital Invested on the Farm

The value of machinery on farms changes considerably over time. Data from a group of grain farm operators who are members of the Illinois FBFM Association details this aggregated data as seen in Chart 1 for 2014. One would expect that as acreage increases, the value of the complement of machinery needed to till, plant, and harvest those acres to increase as well. Review Chart 1 using the scale on the left side to see that as farm size in acres increases so does the total machinery value as measured by market value. For example, a 2,500 acre farm has a corresponding machinery value of near $1,500,000 while a 1,000 acre farm operation has a corresponding machinery value of near $1,000,000.

  • Authors: Brad Zwilling, Brandy Krapf and Dwight D. Raab
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November 19, 2015

Big Data: Alive and Growing in the Food Sector!

Big Data already is being extensively employed at the genetics and consumer ends of the food and ag supply chain. This article will stress the potential for capabilities and knowledge generated at these levels to affect new opportunities within production agriculture. This is the fourth of a six part series on Big Data and Agriculture.

  • Authors: Steve Sonka and Yu-Tien Cheng
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