2014 Peanut PLC Payment Calculation – Alabama Peanut Producers Association

peanut rowsFrom the National Center for Peanut Competitiveness:

USDA-NASS has reported the 2014 marketing year national seasonal average price for peanuts to be $0.22/lb which translates to $440/ton FSP. This can be found on the USDA-NASS website (http://www.nass.usda.gov/index.asp) using their Quick Stats at the bottom of the home page.

If the national seasonal average price is below $535/ton FSP, a 2014 peanut PLC payment will occur. The PLC payment will be $535-$440= $95/base ton FSP.

The farmer has two ways to calculate the total payment per farm serial number.

  1. The farmer would take the $95/base ton times 85% of the base acres (includes generic base allocated to peanuts) on that farm serial number times the payment yield for that farm serial number. This total payment would be reduced by the sequestration cut. Based on the USDA-FSA Handbook for ARCPLC, the 2014 sequestration cut would be 7.3%. This approach is what one would see and hear from USDA-FSA folks and the press.
  2. The alternative approach which the NCPC prefers is as follows. Both approaches will yield the same total PLC dollar amount per farm serial number. First, the farmer calculates their total peanut base tonnage per farm serial number by multiplying the base acres (includes generic base allocated to peanuts) times the payment yield. This will allow the farmer to compare their total base tonnage on that farm to their total production. The farmer would then multiply the PLC payment per ton (in this case it is $95/base ton) by 85% and then reduce that value by the sequestration cut (7.3%). That is $95*.85*(1.0-0.073) which equals $74.85525. One can view the $74.85525 as the net PLC per base ton. The farm’s total PLC payment would then be $74.85525 times the total base tons on the farm.

The farmer needs to be cautioned in that the total payments from all of their farms will be directly attributed to the individual with a cap of $125,000 per entity. If a farmer had any 2014 peanut crop MLGs, that MLG will also be attributed back to the individual and count against the $125,000 payment limit. Based on when the farmer received their MLGs, those gains may count first against their payment limit which could lead to further reduction in actual PLC payments. Southern commodity organizations are working with Members of Congress in obtaining generic certificates applicable for the 2015 and 2016 crops. If successful, the generic certificates would be substituted for potential LDP/MLG which would not be counted against one’s payment limit.

Finally, not knowing how USDA-FSA will round and when they will round, their final numbers may differ slightly from the numbers presented above due to rounding.