2015 Farm Bill ARC-PLC Payment Estimates
As many are aware, the National Agriculture Statistics Service (NASS) recently published county yields for several crops. Since we are now several months into the 2015 marketing year (September 2015 through August 2016) we can begin to make some estimates of 2015 ARC-County and PLC payments. It is important to note that these estimated payments can change because the 2015 marketing year average price is not final and NASS county yields can possibly change a bit yet too.
Your local Extension office can help you run your farm numbers through the 2015 ARC-PLC calculator or you can run your numbers through the calculator yourself. The latest version of the 2015 ARC-PLC Payment Calculator can be accessed at www.ag.ndsu.edu/farmmanagement/farm-bill . Scroll down the page to the “ARC Payments” section and you will find a link to the excel spreadsheet. When you open the spreadsheet be sure to select the county where your land is located. Then enter your base acres. Choose from the drop down menu if the entered base acres are enrolled in ARC-CO or PLC. Next enter the PLC payment yield for PLC enrolled acres or enter the County Average Yield for ARC-CO enrolled acres.
At this time the payment calculator contains the most recent Marketing Year Average Prices (MYA) so keep in mind that as this price changes so will estimated payments. Also keep in mind that FSA county average yields used in ARC-County payment determination may be somewhat different from NASS yields.
Please feel free to call your local Extension or FSA office for questions or to set up an appointment to run the analyzer.
Tight Operating Margins What Costs to Cut
With tight operating margins this year, cash-flow projections are more critical than ever. A common question being asked in Extension offices across the state by both producers and lenders is, “which expenses can be reduced?” This is a tricky question because there are 3 main factors that impact net return per acre. These are:
When asked which of the three has the most impact on net return per acre many will say “costs” since yield is for the most part is very weather dependent and thus for the most part considered out of our control. We can’t do much about price either so that leaves us with “costs” right? Well, reducing costs or expenses is the typical response to tighter operating margins, however, when deciding which costs to cut we need to ask ourselves, “What costs can be cut without cutting yield?” since yield is actually the most important factor in net returns per acre especially when dealing with leaner operating margins.
Typically, there are three ways to cut costs:
1.Reduce the quantity of inputs
2.Change the inputs
3.Lower the price for inputs
Keeping in mind that our goal during tight operating margins should be to cut costs without decreasing yield we will want to take a look at our variable and fixed costs and look for those costs we could cut without jeopardizing yield. Variable costs such as: seed, herbicide, fungicide, insecticide, and fertilizer can all affect yield if we reduce the quantity to save money. Instead of cutting quantity, perhaps we can maximize efficiency on some of our inputs such as seed and fuel by taking advantage of early pre-pay discounts that some companies and businesses offer.
Land cost is also something we might be able to manage, although this could mean renegotiating cash rents or possibly giving up high cash rent land and trying to find lower-cost land. Generally, if gross return is greater than direct costs plus the land rent, then keep it, because it is contributing to return over variable costs (ROVC).
Some other questions to ask yourself and things to consider when trying making the most of your operating dollars in the coming cropping season without sacrificing yield are:
1.Seed selection: Are you paying for seed traits you don’t need?
2.Fungicide choices: Are you using field scouting to make your fungicide application decisions?
3.Herbicide and pesticide choices: Are you basing your crop herbicide and pesticide choices on field scouting reports?
4.Could you reduce the number of field operations/passes across the field?
5.Could you benefit from split applications of nitrogen fertilizer?
6.Are your tillage/planting/harvesting operations being completed in a timely enough manner to avoid yield losses?
7.Are your seeding rate decisions based on research results?
8.Are you running soil tests routinely and using them to make P and K application decisions?
9.Have you discussed reducing cash rental rates with landlords and/or discussed the possibility of adopting a flex rent schedule?
10.Have you considered a machinery sharing or leasing arrangement to reduce costs?
11.Have you considered taking marginal land such as saline and wet spots out of production to reduce inputs where yields are typically low anyway? Perhaps rotatory mowing the weeds or consider growing a salt tolerant cover crop on these areas to mitigate saline and weed issues in these trouble spots?
Although this list doesn’t cover all the possibilities, I hope it will give you some ideas of one or more changes you could make on your operation that could help you improve next year’s bottom line.
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