Disparity in ARC Payments
Marcia Zarley Taylor DTN Executive Editor
Wed Oct 7, 2015 09:26 AM CDT
(Page 1 of 2)

LOUISVILLE, Ky. (DTN) -- When USDA issues an estimated $3.5 billion in farm program checks for the 2014 crop to corn growers later this month, policymakers should brace for a torrent of complaints between the have nots and the haves.

University of Nebraska economist Brad Lubben expects Agricultural Risk Coverage (ARC) payments to vary widely between some neighboring counties when checks are cut later this month. (DTN/The Progressive Farmer photo by Jim Patrico)

Growers were warned that payments would vary based on county revenue formulas, but the disparity may catch some off guard. In parts of Texas, for example, growers in one county will collect about $109 per base corn acre, while those in a county next door will collect nothing. In Nebraska, some checks will run $20 an acre, others closer to $80 an acre. Similar situations are cropping up in Kansas, Iowa and Illinois, in large part because of the local variation in 2014 yields, policy experts report. In parts of Oklahoma, USDA may have had difficulty establishing county wheat yields, since farmers often graze fields rather than completing harvest, others theorize.

"In the past, Loan Deficiency Payments were the only farm program payment I can think of where checks varied by counties," said Dee Vaughan, a former National Corn Grower Association president and Dumas, Texas, grower. "But that amount varied by only a few dollars per acre, not by $100 an acre."

The shift to county-based calculations for the new farm safety net highlights how aid is supposed to be targeted to those in need. For most producers, it means bumper 2014 county yields offset the decline in prices, so they won't meet the threshold for farm payments. But for farmers who operate in more than one county, this bureaucratic technicality has become a sore point.

At issue is that program payments will be determined by your "administrative" county Farm Service Agency (FSA) office. For growers with farms in multiple counties, that rule means Agricultural Risk Coverage-County checks will not be paid at county rates where the ground is located but where records are housed.

All of Nebraska farmer John Oehlerking's 1,600-acre Nebraska farmland will be paid at the Otoe County rate even though half of his land is located in Cass County where other farmers are being paid at a much higher rate. The difference could be up to 50% more, although FSA has not released final calculations yet, he said.

"It is perplexing to me why my Cass County ground should be penalized, just because of where I sign my papers," Oehlerking told DTN. "Had I chosen to do all my paperwork in Cass County, I would have had a windfall."

Payments in Cass County are projected to be close to $50 an acre for corn while projected payments in Otoe County are projected at $18 an acre.

Underpaying some land and overpaying others makes little sense. But when Oehlerking contacted his FSA office "they were polite but they basically said, 'We don't like it either, but there is nothing we can do about it, so contact your elected officials,'" he said.

Iowa corn growers first noticed the discrepancy last winter, but the last-minute remedy they were able to secure in the FSA handbook only allowed farmers to change administrative offices due to a county FSA office closure or consolidation. Even then, farmers were required to designate a new office by Sept. 25 for 2014 payment purposes.

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