1. PLC: Corn 2014 Payment Potential Notes: PLC payments are made on 85% of base acres. Marketing Year Price ($/bu) PLC Payment Rate ($/bu) PLC Payment ($/base acre) $3.10$0.60$76.50 $3.20$0.50$63.75 $3.30$0.40$51.00 $3.40$0.30$38.25 $3.50$0.20$25.50 $3.60$0.10$12.75 $3.70$0.00 Reference Price = $3.70 per bushel Payment Yield = 150 bushels per acre

2. PLC: Soybean 2014 Payment Potential Notes: PLC payments are made on 85% of base acres. Marketing Year Price ($/bu) PLC Payment Rate ($/bu) PLC Payment ($/base acre) $7.20$1.20$42.84 $7.40$1.00$35.70 $7.60$0.80$28.56 $7.80$0.60$21.42 $8.00$0.40$14.28 $8.20$0.20$7.14 $8.40$0.00 Reference Price = $8.40 per bushel Payment Yield = 42 bushels per acre

3. ARC-CO: 2014 Corn Revenue Guarantee Notes: Audubon County, Iowa actual corn yields. Revenue Guarantee equals 86% of Benchmark. YearYieldMYA PriceARC Price 2009191$3.55$3.70 2010160$5.18 2011177$6.22 2012115$6.89 2013156$4.45$4.46 Oly. Ave.164$5.29 Benchmark Revenue = $862.27 per acre ARC Revenue Guarantee = $741.55 per acre

4. ARC-CO: 2014 Potential Corn Payment Price: $3.50 $4.00$4.50$5.00 Yield: 100$73.29 125$73.29 150$73.29 $56.57$0.00 175$73.29$35.32$0.00 200$35.32$0.00 ARC Revenue Guarantee = $741.55 per acre ARC Max Payment Rate = $86.22 per acre But ARC-CO is paid on 85% of base acres and 85% of $86.22 is $73.29 Audubon County, Iowa

5. ARC-CO: 2014 Soy Revenue Guarantee Notes: Audubon County, Iowa actual soybean yields. Revenue Guarantee equals 86% of Benchmark. YearYieldMYA PriceARC Price 200955$9.59 201055$11.30 201155$12.50 201238$14.40 201344$13.00 Oly. Ave.51.3$12.27 Benchmark Revenue = $629.45 per acre ARC Revenue Guarantee = $541.32 per acre

6. ARC-CO: 2014 Potential Soy Payment Price: $9.00 $10.00$11.00$12.00 Yield: 35$53.50 40$53.50 $52.12 45$53.50 $39.37$1.12 50$53.50$35.12$0.00 55$39.37$0.00 ARC Revenue Guarantee = $541.32 per acre ARC Max Payment Rate = $62.94 per acre But ARC-CO is paid on 85% of base acres and 85% of $62.94 is $53.50 Audubon County, Iowa

7. ARC-CO: 2014 Corn Revenue Guarantee Notes: Carroll County, Iowa actual corn yields. Revenue Guarantee equals 86% of Benchmark. YearYieldMYA PriceARC Price 2009201$3.55$3.70 2010182$5.18 2011180$6.22 2012122$6.89 2013130$4.46 Oly. Ave.164$5.29 Benchmark Revenue = $867.56 per acre ARC Revenue Guarantee = $746.10 per acre

8. ARC-CO: 2014 Potential Corn Payment Price: $3.50 $4.00$4.50$5.00 Yield: 100$73.74 125$73.74 150$73.74 $60.43$0.00 175$73.74$39.18$0.00 200$39.18$0.00 ARC Revenue Guarantee = $746.10 per acre ARC Max Payment Rate = $86.75 per acre But ARC-CO is paid on 85% of base acres and 85% of $86.75 is $73.74 Carroll County, Iowa

9. ARC-CO: 2014 Soy Revenue Guarantee Notes: Carroll County, Iowa actual soybean yields. Revenue Guarantee equals 86% of Benchmark. YearYieldMYA PriceARC Price 200955$9.59 201053$11.30 201152$12.50 201239$14.40 201341$13.00 Oly. Ave.48.7$12.27 Benchmark Revenue = $597.55 per acre ARC Revenue Guarantee = $513.89 per acre

10. ARC-CO: 2014 Potential Soy Payment Price: $9.00 $10.00$11.00$12.00 Yield: 35$50.78 40$50.78 $28.80 45$50.78 $16.05$0.00 50$50.78$11.80$0.00 55$16.05$0.00 ARC Revenue Guarantee = $513.89 per acre ARC Max Payment Rate = $59.75 per acre But ARC-CO is paid on 85% of base acres and 85% of $59.75 is $50.78 Carroll County, Iowa

11. ARC-CO: 2014 Corn Revenue Guarantee Notes: Guthrie County, Iowa actual corn yields. Revenue Guarantee equals 86% of Benchmark. YearYieldMYA PriceARC Price 2009174$3.55$3.70 2010141$5.18 2011169$6.22 2012113$6.89 2013126$4.46 Oly. Ave.145$5.29 Benchmark Revenue = $767.05 per acre ARC Revenue Guarantee = $659.66 per acre

12. ARC-CO: 2014 Potential Corn Payment Price: $3.50 $4.00$4.50$5.00 Yield: 100$65.20 125$65.20 $43.86 150$65.20 $0.00 175$56.36$0.00 200$0.00 ARC Revenue Guarantee = $659.66 per acre ARC Max Payment Rate = $76.70 per acre But ARC-CO is paid on 85% of base acres and 85% of $76.70 is $65.20 Guthrie County, Iowa

13. ARC-CO: 2014 Soy Revenue Guarantee Notes: Guthrie County, Iowa actual soybean yields. Revenue Guarantee equals 86% of Benchmark. YearYieldMYA PriceARC Price 200948$9.59 201050$11.30 201153$12.50 201237$14.40 201338$13.00 Oly. Ave.45.3$12.27 Benchmark Revenue = $555.83 per acre ARC Revenue Guarantee = $478.01 per acre

14. ARC-CO: 2014 Potential Soy Payment Price: $9.00 $10.00$11.00$12.00 Yield: 35$47.46 40$47.46 $38.01$0.00 45$47.46$28.01$0.00 50$28.01$0.00 55$0.00 ARC Revenue Guarantee = $478.01 per acre ARC Max Payment Rate = $55.83 per acre But ARC-CO is paid on 85% of base acres and 85% of $55.83 is $47.46 Guthrie County, Iowa

15. ARC-IC: 2014 Corn & Soybean Combined Revenue Guarantee Year Corn Yield ARC PriceRevenue Soy YieldARC Price Revenue 2009163.4$3.70$604.5843.3$9.59$415.25 2010184.1$5.18$953.6454.5$11.30$615.85 2011174.2$6.22$1083.5251.1$12.50$638.75 2012133.2$6.89$917.7545.7$14.40$658.08 2013146.3$4.45$651.0440.1$13.00$521.30 Oly. Ave. $840.81$591.97 In 2014, if the farm is planted 60% to corn and 40% to soybeans, then Benchmark Revenue = $741.27 per acre Revenue Guarantee = $637.49 per acre

16. ARC-IC : 2014 Potential Corn & Soybean Combined Payment Actual 2014 farm yields:Corn 150 bushels per acre Soy45 bushels per acre Marketing year prices:Corn$4.00 per bushel Soy$10.50 per bushel Calculated revenues:Corn$600.00 per acre Soy $472.50 per acre ARC Revenue: 60%*$600.00 + 40%*$472.50 = $549.00 ARC-IC is paid on 65% of base acres ARC-IC Payment = $48.18 per acre (65% of $637.49-$549.00)

17. Supplemental Coverage Option (SCO)  An additional policy to cover “shallow losses”  Shallow loss = part of the deductible on the producer’s underlying crop insurance policy  SCO has a county-level payment trigger  Indemnities are paid when the county experiences losses greater than 14%  Premium subsidy: 65%  Starts in 2015  Can’t have ARC and SCO together

18. RP RPHPE YP SCO Supplemental Coverage Option (SCO)

19. Tips on Electing a Program ARC-CO guarantee will be similar in 14’ & 15’ PLC will probably never pay in a drought year If commodity prices remain low, ARC will provide less support in future years. Where is greatest risk? Price or production? Both PLC and ARC may pay out in 2014 In a perfect world, farm programs would never trigger

20. Iowa State University Farm Bill web site: Ag Decision Maker: www.extension.iastate.edu/agdm/info/farmbill.html Shane Ellis Ag and Farm Management Field Specialist ISU Extension and Outreach shanee@iastate.edu www.extension.iastate.edu/agdm/info/farmbill.html shanee@iastate.edu