by Gary Wright, Farm Management Specialist
By the time this article is read, Iowa State University Extension and Outreach and USDA/FSA experts will have worked together at four regional meetings in Northwest Iowa to discuss 2022 Crop Year decisions. If you were able to attend, thank you. If unable, please see the meeting’s recap below in front of the March 15, 2022, USDA/FSA decision deadline.
For the fourth time (of the 5-year crop bill), producers will be asked to decide between ARC (revenue) and PLC (price) by March 15, 2022. NOTE: If during the last 5 years lower production was experienced, the producer is encouraged to speak directly with FSA on ARC-Individual programming decisions.
Based upon present and near-term projected commodity prices, which are above the reference prices ($3.70 corn; $8.40 soybeans), it appears unlikely that a 2022 crop year PLC subsidy payout will occur in October 2023. Comparatively, an ARC-CO, which protects against revenue loss, also appears less than likely, short of a serious crop yield loss.
Producers are encouraged to get fully informed by listening to the January 11 statewide webinar, conducted by USDA/FSA and ISU Extension and Outreach (recording online at Ag Decision Maker), or listening to other recorded webinars offered across the State of Iowa. As with the in-person meetings, webinar meeting content will place a heavier focus upon Ag Decision Maker tools (https://www.extension.iastate.edu/agdm/) and individual expectations for 2022 yields and prices.
Like in the past, different levels of federal crop insurance risk protection (ARC and PLC) will be decided. In addition, Supplemental Coverage Option (SCO) and/or Enhanced Coverage Option (ECO) endorsements can be tied to the multi-peril product (typically Revenue Protection or Yield Protection). Costs (premiums) should be evaluated by consulting with your trusted crop insurance agent. Please know some limitations apply when matching federal crop insurance decisions with the various endorsements.
2022 Crop Decisions/Operating Margins
Clearly, market price outcomes directly impact the above ARC v. PLC decisions. Notwithstanding, let’s talk about operating margins.
Market Prices – Continued robust demand, after the near-record corn and soybean domestic crop sizes during 3 of the last 4 years, have supported a general uptick to market prices, since the 2020 harvest. The 2022 market price projections look to slow/reverse those trends when comparing to the average market prices for 2021; however, South American drought conditions and the Ukraine/Russia situation, both could point to increased exports and prices; hence, stronger market prices. Current USDA corn and soybean per bushel market prices for 2022 are $4.80 and $10.50, down 12 and 17 percent, respectively from one year ago. Is pre-harvest marketing a part of the 2022 critical decision-making?
Expenses – Final production input costs will be an unknown until later in the year. At present, 2022 crop input costs have jumped dramatically, led by corn fertility (+ $115/acre, 20.0 percent) and soybeans (+$64/acre, 18.6 percent), when compared to 2021. The producer will want to have completed a keen by-enterprise analysis to know their own costs of production.
Margins – Based upon most recent input costs and market price analysis, breakeven operating market prices at/near $4/bushel and $10/bushel, respectively, for corn and soybeans, are reasonably projected. This compares to the most recent USDA average per bushel prices noted in the above paragraph. Ag Decision Maker is an online management decision tool that helps the producer by using what-if scenarios to plan. Is this the year to examine the crop rotation make-up or fertilization rates?
If the reader has questions about or needs help with any of the above topics, please feel free to contact me (Gary D. Wright, Farm Management Specialist, 712-223-1574, https://www.extension.iastate.edu/ag/people/gary-wright).