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Weekly Farm Economics

2017 ARC-CO Payments and Outlook for 2018 Payments

October 16, 2018
farmdoc daily (8):191
Recommended citation format: Schnitkey, G., C. Zulauf, J. Coppess and N. Paulson. "2017 ARC-CO Payments and Outlook for 2018 Payments." farmdoc daily (8):191, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 16, 2018. Permalink

The Farm Service Agency (FSA) has released 2017 county yields, 2017 Market Year Average (MYA) prices have been determined, and FSA is in the process of making 2017 ARC-CO payments.  This article presents U.S. maps of 2017 ARC-CO payments for corn, soybeans, and wheat.  A table of Illinois payments also is given.  While 2017 ARC-CO payments are known, 2018 payments are not determined.  County yields for 2018 will not be known for some time and the 2018 market years for corn and soybeans are just beginning.   Still, it seems prudent to build low expectations for 2018 ARC-CO payments.

ARC-CO and Corn

ARC-CO makes a payment when county revenue falls below 86% of the county’s benchmark revenue.  Benchmark revenue is the benchmark yield times the benchmark price.  The benchmark yield is the Olympic average of the five previous yields for a county.  The benchmark price is the Olympic average of the five previous MYA prices, with the minimum price used in calculations equal to the reference price ($3.70 for corn, $8.40 for soybean, $5.50 for wheat).

Figure 1 shows the ARC-CO Payment Estimator, a Microsoft Excel spreadsheet available for download from the FAST section of farmdoc, illustrating ARC-CO calculations for corn in Calhoun County, Illinois.  Actual payments are shown for 2014 through 2017, with an estimate given for 2018.

In 2017, the benchmark yield in Calhoun County is 161 bushels per acre and the benchmark price is $3.95 per bushel, giving an ARC guarantee of $547 per acre ($547 = .86 x 161 yield x $3.95 price).  In 2017, the actual county yield is 155 bushels per acre and the MYA price is $3.36, yielding revenue of $521 per acre.  Actual revenue is less than the ARC guarantee, resulting in an ARC-CO payment.  After adjusting for the sequester and the fact that only .85 base acres receive payments, the 2017 ARC payment is $20.69 (see footnote 5 of Figure 1 for more detail in calculating ARC-CO payments).

Note that the benchmark price for 2018 is $3.70 per acre, lower by $.25 than the 2017 benchmark price of $3.95.  The benchmark price is at its lowest level.  The Olympic average of the five previous prices discards the $4.46 MYA for 2013 as the high price, leaving only $3.70 in the set of prices used to calculate the ARC-CO benchmark price.  A lower 2018 benchmark price results in a lower 2018 ARC guarantee.

We have no estimates of 2018 county yields and the 2018 market year has not ended.  Still, it seems highly likely that ARC-CO payments will not make payments in most counties in 2018.  Yields have been exceptional across much of the nation.  Prices would have to be near $3.00 for ARC-CO to make payments.

For 2017 corn, geographical areas where many counties will receive 2017 ARC-CO payments include western North Dakota, South Dakota, Kansas, the panhandle of Texas, eastern Arkansas, central Indiana, western Ohio, central Michigan, eastern New York, and Virginia. Other counties sporadically located throughout the United States will receive payments as well (see Figure 2).  The largest payments by ARC-CO are almost entirely outside the Corn Belt.


Figure 3 shows ARC-CO soybean calculations for DeKalb County, Illinois.  After sequester, DeKalb County is projected to have a $51.62 payment per base acre. The ARC-CO guarantee is $560 per acre based on a 60 bushel per acre benchmark yield and a $10.86 per bushel benchmark price.  Unlike many counties, DeKalb County had a below average yield resulting in an ARC-CO payment.  DeKalb County had a 53 bushel per acre yield in 2018, 7 bushels below its benchmark yield.

The benchmark price for 2018 will be $9.63 per bushel, $1.23 per bushel lower than the 2017 benchmark price of $10.86.   Yields are reportedly above average for soybeans in many areas of the United States.  Large 2018 yields combined with lower benchmark prices will result in fewer counties receiving ARC-CO payments for soybeans in 2018 unless the trade situation results in much lower MYA prices for soybeans than currently expected.

For soybeans, geographical areas where ARC-CO made payments in 2017 include western North and South Dakota; central Kansas; border counties along the Wisconsin-Illinois border; eastern Indiana, western Ohio, Michigan; and western Pennsylvania (see Figure 4).


Landowners in Vermilion County, Illinois received a $37.82 per acre payment on wheat based on a 78 bushel per acre benchmark yield and a $6.12 benchmark price (see Figure 5).  The 2018 benchmark price will be reduced to $5.66 per bushel, lowering payments in 2018.

Geographical areas having many counties receiving 2017 ARC-CO payments include Montana, North Dakota, South Dakota, eastern Kansas, Oklahoma, central Texas, Indiana, Ohio, Michigan, and Virginia (as Figure 6).  The largest wheat payments are in the inter-mountain and Pacific Coast states.

Illinois Payments

Estimated corn, soybeans, and wheat payments for Illinois counties are shown in Table 1. Corn payments will occur for some northern counties and for a band of counties in southeast Illinois. Some northern Illinois counties are projected to receive soybean payments. ARC-CO is projected to make payments for wheat in some counties in the middle part of the state.


Reliable estimates of 2018 ARC-CO payments will be able to be made after NASS releases county yields in late February.  At this point, ARC-CO payments likely will not be prevalent for 2018 production.  Building $0 per acre into cash flow estimates for the 2018 payments that will be received in fall 2019 seems prudent at this point.

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