Northern Plains – Wheat, Barley and Minor Oilseeds 2014 Farm Bill Education Conference Kansas City, MO September 3, 2014 Dwight Aakre Farm Management Specialist The Northern Plains – Then and Now • Historically – Wheat was the dominant crop, therefore high wheat base – Produced a major share of the U.S. barley crop – Very little precipitation from mid July through August • Currently – Average annual precipitation has increased 20% in the last 20 years – Much of this increase coming in July and August – Increased disease pressure and difficult harvest conditions for small grain – Improved environment for corn and soybeans State Average Counter-Cyclical Payment Yields, North Dakota Wheat 29.7 bu Barley 43.6 bu Soybeans 30.4 bu Corn 81.0 bu Sunflowers 1151 lbs Canola 1097 lbs Oats 44.6 bu Flaxseed 13.2 bu State Averages, North Dakota Crop Wheat Barley Sunflowers Canola Flax Soybeans Corn Current C-C Yield 90% of 2008-12 Average Change 29.7 43.6 35.8 49.9 +21% +14% 1151 1097.5 1348 1426 +17% +30% 13.2 30.4 81 17.5 27.9 107.6 +33% -8% +33% Payment Yield Update Farm’s current CC wheat yield: 32bu 2008 Zero Plant 2009 Zero Plant 2010 90bu 2011 Zero Plant 2012 Zero Plant Average PLC Yield Yield (90%) Will this impact reallocation of base? Will this impact ARC vs PLC decision? 90bu 81bu Existing Crop Base as a Percent of Total Base Acres, North Dakota Wheat 64% Barley 12% Soybeans 7% Corn 6% Sunflowers 5% Canola 3% Oats 2% Flaxseed 1% 2009-2012 Average Planted and Prevented Planted as a Percent of Total Covered Commodities Wheat 44% Barley 4% Soybeans 22% Corn 14% Sunflowers 5% Canola 6% Oats 1% Flaxseed 2% Base Reallocation Strategies 1. Safety Net 2. Maximum Payments Enter Existing Base Acres, and Planted and Prevented Planted (PP) Acres, 2009-2012* Crop Wheat Soybean Corn Barley Oats Flax Canola Sunflower Dry Peas Lentils Safflower Mustard Lg.Ckpea Sm.Ckpea Total Acres Existing 2009 2010 Base Ac. Planted PP Planted PP 378.9 70.0 34.5 56.7 653.5 74.1 28.0 435.6 21.4 41.2 28 2011 Planted PP 178.7 114.0 252.8 214.0 16.0 2012 Planted PP 211.4 61.0 192.8 65.0 196.5 526.2 832.1 725.1 775.5 465.2 2009-2012 Base Real- Avg location 79.0 59.4 217.4 163.5 232.0 174.5 48.2 36.3 16.3 12.3 57.5 43.3 49.1 36.9 699.5 526.2 *You ma y ei ther keep your exi s ting (ol d) ba s e a cres or rea l l oca te your ba s e. The ba s e rea l l oca tion formul a for ea ch crop i s i ts 2009-2012 a vera ge a crea ge di vi ded by the total 2009-2012 a vera ge a crea ge of a l l progra m crops mul tipl i ed by the total exi s ting (ol d) ba s e a cres . Ba s e rea l l oca tion ma y cha nge Indi vi dua l crop ba s e a cres but not total FSA fa rm ba s e a cres . ANALYSIS SUMMARY.Reallocation of base acres is the best option, assuming your projected yields and prices* Crop Wheat Soybean Corn Barley Oats Flax Canola Sunflower Dry Peas Lentils Safflower Mustard Lg.Ckpea Sm.Ckpea Totals Old Base 378.9 56.7 21.4 41.2 28.0 526.2 EXISTING BASE REALLOCATION OF BASE 2014 Pmt Total 2014-2018 Pmt Base 2014 Pmt Total 2014-2018 Pmt Program Amount Program Amount Realloca. Program Amount Program Amount 59.4 ARC 556 ARC 1,759 163.5 ARC 1,604 ARC 5,071 174.5 ARC 9,468 ARC 24,284 36.3 PLC 401 PLC 2,006 PLC 408 PLC 2,042 PLC 306 PLC 1,530 12.3 43.3 36.9 1,271 5,331 526.2 11,474 31,361 *Hi gher of ARC or PLC pa yment i s s el ected by crop. It i s a s s umed tha t a nnua l FAV pl a ntings do not exceed non-ba s e + 15% of ba s e a cres . Marketing Year Average Prices All Wheat All Barley All Sunflower 2013 6.87 6.06 21.70 20.60 13.70 4.45 13.00 2012 7.77 6.43 25.40 26.50 13.60 7.20 14.30 2011 7.24 5.35 29.10 24.00 13.90 6.22 12.50 2010 5.70 3.86 23.30 19.30 12.20 5.18 11.30 2009 4.87 4.66 15.10 16.20 8.15 3.55 9.59 2008 6.78 5.37 21.80 18.70 12.70 4.06 9.97 2007 6.48 4.02 21.70 18.30 13.00 4.20 10.10 2006 4.26 2.85 14.50 11.90 5.80 3.04 6.43 2005 3.42 2.53 12.10 9.62 5.94 2.00 5.66 2004 3.40 2.48 13.70 10.70 8.07 2.06 5.74 Canola Flax Corn Soybean Marketing Year Average Barley Price All Barley Feed Barley Malting Barley 2012 $6.43 $5.62 $6.58 2011 $5.35 $4.91 $5.44 2010 $3.86 $3.22 $4.05 2009 $4.66 $2.61 $5.02 2008 $5.37 $3.82 $5.71 2007 $4.02 $4.35 $3.87 Wheat – Walsh County Estimated Payment per Acre Prices Stable Stable Rising* Declining* 6.30 6.30 6.30 6.30 7.00 6.30 Rising* Declining* ARC PLC ARC PLC ARC PLC 2014 -0- -0- -0- -0- -0- -0- 6.20 2015 -0- -0- -0- -0- -0- -0- 7.50 6.00 2016 -0- -0- -0- -0- 1.54 -0- 6.30 8.15 5.75 2017 -0- -0- -0- -0- 2.36 -0- 6.30 8.50 5.30 2018 -0- -0- -0- -0- -0- 7.31 *Price estimates provided by Frayne Olson, NDSU crops economist. Barley – Bottineau County Estimated Payment per Acre Prices Stable Stable Rising* Declining* 4.75 4.75 4.75 4.75 4.75 4.75 Rising* Declining* ARC PLC ARC PLC ARC PLC 2014 -0- 9.52 -0- 9.52 -0- 9.52 3.95 2015 -0- 9.52 -0- 9.52 29.63 47.60 5.30 3.75 2016 -0- 9.52 -0- -0- 29.35 57.12 4.75 5.50 3.55 2017 -0- 9.52 -0- -0- 28.83 66.64 4.75 5.60 3.05 2018 -0- 9.52 -0- -0- 26.93 90.44 *Price estimates provided by Frayne Olson, NDSU crops economist. Canola – Cavalier County Estimated Payment per Acre Prices Stable Stable Rising* Declining* 18.60 18.60 18.60 18.60 20.00 18.60 Rising* Declining* ARC PLC ARC PLC ARC PLC 2014 2.99 21.84 2.99 21.84 2.99 21.84 18.00 2015 1.10 21.84 -0- 2.11 10.40 30.30 21.50 17.00 2016 -0- 21.84 -0- -0- 18.93 44.39 18.60 22.50 16.00 2017 -0- 21.84 -0- -0- 22.62 58.49 18.60 23.50 13.75 2018 -0- 21.84 -0- -0- 31.26 90.20 *Price estimates provided by Frayne Olson, NDSU crops economist. Sunflower – Emmons County Estimated Payment per Acre Prices Stable Stable Rising* Declining* 20.90 20.90 20.90 20.90 22.00 20.90 ARC Rising* Declining* PLC ARC PLC ARC PLC 2014 31.85 -0- 31.85 -0- 31.85 -0- 20.00 2015 26.96 -0- 15.22 -0- 29.08 1.91 23.50 19.00 2016 7.38 -0- -0- -0- 26.80 14.65 20.90 24.00 18.00 2017 -0- -0- -0- -0- 20.90 25.00 15.25 2018 -0- -0- -0- -0- *Price estimates provided by Frayne Olson, NDSU crops economist. -0- 27.39 21.78 62.43 Flax – Ward County Estimated Payment per Acre Prices Stable Stable Rising* Declining* 11.26 9.90 11.26 11.26 10.40 11.26 Rising* Declining* ARC PLC ARC PLC ARC PLC 2014 6.94 0.31 6.94 0.31 6.94 0.31 11.00 2015 -0- 0.31 -0- -0- 3.84 4.28 11.25 10.25 2016 -0- 0.31 -0- -0- 9.85 15.76 11.26 11.75 9.70 2017 -0- 0.31 -0- -0- 12.45 24.17 11.26 12.25 8.25 2018 -0- 0.31 -0- -0- 20.13 46.36 *Price estimates provided by Frayne Olson, NDSU crops economist. Corn – Barnes County Estimated Payment per Acre Prices Stable Stable Rising* Declining* 3.90 3.90 3.90 3.90 4.70 3.90 ARC Rising* Declining* PLC ARC PLC ARC PLC 2014 51.52 -0- 51.52 -0- 51.52 -0- 3.80 2015 52.91 -0- -0- -0- 52.91 -0- 4.80 3.60 2016 19.16 -0- -0- -0- 47.71 9.86 3.90 4.95 3.40 2017 -0- -0- -0- -0- 8.32 29.58 3.90 5.50 2.90 2018 -0- -0- -0- -0- 36.91 78.88 *Price estimates provided by Frayne Olson, NDSU crops economist. Soybeans – Stutsman County Estimated Payment per Acre Prices Stable Stable Rising* Declining* 10.35 10.35 10.35 2014 10.35 11.00 10.35 Rising* Declining* ARC PLC ARC PLC ARC PLC 0.67 -0- 0.67 -0- 0.67 -0- 10.00 2015 10.54 -0- -0- -0- 19.46 -0- 11.90 9.40 2016 -0- -0- -0- -0- 17.12 -0- 10.35 12.50 8.90 2017 -0- -0- -0- -0- 16.91 -0- 10.35 13.00 7.60 2018 -0- -0- -0- -0- 23.75 20.40 *Price estimates provided by Frayne Olson, NDSU crops economist. Estimated Increase in Payment Per Acre from Re-Allocation of Base Acres with Alternative Price Projections, 2014-2018 Price Trend Farm/Crop Stable Increasing Decreasing Wheat $16 $5 $28 Barley $7 $10 $15 Canola $20 $3 $9 Sunflower $6 $4 $14 Flax $3 $1 ($1) Corn $19 $6 $25 Soybean $16 $5 $21 Conclusions Base re-allocation will have the greatest impact on potential payments Base re-allocation and yield update are the landowners decision Yield update will be significant for most crops Wheat and barley base acres will decline The change from “feed” barley to “all” barley significantly reduces potential payments for barley