From time to time, for farm programs, crop disaster declarations, crop insurance options and other things perhaps — we hear about an “Olympic” average for crop yields and other things. Olympic average simply means — for a given set of numbers, you drop the high and the low and average the rest.
Let’s say the corn yields over a 5 year period run 122, 142, 110, 67 and 138. Drop the high at 142 and the low at 67. Add 122, 110 and 138 and divide by 3; and the 5-year Olympic average is 123. For any given purpose, the parameters could be set however the writer of the rules prefers. For a 10-year Olympic average, someone could choose to drop the top two and the bottom two and average the remaining 6. You might use an Olympic average at a fishing contest or a track meet.
For crop disaster declarations, the criteria was that the current year crop yield is expected to be 70 percent or less than the most recent 5-year Olympic average yield. That means a 30 percent or greater yield loss is expected. The challenge is to “guesstimate” that before the crop is harvested.
In the 2014 Farm Bill, you’ll read about the Price Loss Coverage (PLC) option. For PLC, with corn for example, a 12-month market year average price (MYA) will be determined from Sept. 1 through Aug. 31 the following year. This price will be compared to a reference price of $3.70 that has been set for 2014-2018. A calculation will be made based on corn base acres and corn base yield for the farm unit. This option is similar to the old countercyclical payment process.
You will also read about the ARC (Agricultural Risk Coverage) option. This option might be considered a “revenue” based option that includes yield and price variables. It looks like the calculations will use the current year yield, the most recent 5-year Olympic average yield, current MYA (Market Year Average), an Olympic average for MYA (Market Year Average) prices for the preceding 5 years, and a factor of 65 percent of the crop based acres. The Olympic average for yield and price means that these numbers will change from year to year.
With the ARC option, you have the option of basing yield on your own farm yields or county average yields. There are other components to the program options that we’ll learn more about over the next few months. The goal here is to understand what a 5-year Olympic average is; and to know it will be part of evaluating 2014 Farm Bill Crop Program options sometime later this summer or fall.
For a closer look at this process, the tables here list yields for consecutive 5-year periods from 2004 to 2013 for corn and soybeans. In the 04-08 column, the first number is MN Ag Statistics County Yield for 2004 following through to the 2008 yield, then the average of all 5 years, and the Olympic average dropping the high and low year.
The “Current Yield as a % of the 5-Year Olympic Average” is calculated starting with the 05-09 groups. For example, in Stearns County, the 2009 corn yield of 167 bushels per acre is 124.3 percent of the 04-08 Olympic average yield of 134.3 listed for the previous 5-year period.
Learn about the 2014 Farm Bill when you can. For crop production, factors that may be more important for the future of your farm operation may include: crop production practices and budgets, wise use of inputs, correct crop insurance for risk protection where needed, and marketing and feeding practices. The Farm Bill is meant to provide a little more of a safety net when crops or prices are poor.
The FSA Office will be the source of all official information about the 2014 Farm Bill.