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ARC/PLC Enrollment Is Open, Farmers Urged to Wait

Payments determined by marketing year average price that just started.

Although signup is underway for either Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC) for this year’s crops, being in a rush is probably not a good idea for several reasons.

Last week USDA announced that you can now rush over to your Farm Service Agency office and sign up, with a deadline of next March 15.

One reason for waiting a bit is that USDA announced another important date last week: October 7. On that day you can elect ARC or PLC on your base of program crops for both the 2019 and 2020 crops. And, according to the USDA announcement, “During this time, farm owners have a one-time opportunity to update PLC payment yields that takes effect beginning with crop year 2020.

If the owner accompanies the producer to the office, the yield update may be completed during the same office visit.”

Updating the yields on file at your FSA office is important if you enroll in the PLC program. That yield is a key factor in determining potential PLC payments you could receive.

You may want to procrastinate even more on deciding between ARC and PLC, perhaps crowding that March 15 deadline. As was the case after the 2014 Farm Bill, which introduced ARC and PLC, both programs use the marketing year average price to help determine whether you will get program payments.

For corn and soybeans, the marketing year for 2019 just started on September 1 and will run through August 31 on 2020. Only after that will producers know if payments are likely.

“This is not a program you want to be in a hurry on,” says Steve Johnson, an Iowa State University Extension farm management specialist.

Obviously, it’s impossible to know the marketing year average price by March 15. Johnson suggests waiting at least until next January’s WASDE (World Agricultural Supply and Demand Estimates) from USDA. Look for the average price for clues for corn and soybean values.

Or you can check the latest projections from FAPRI (Food and Agricultural Policy Research Institute) at the University of Missouri. FAPRI’s current projection, released August 28, puts the farm price of corn at $3.59 a bushel. That’s 11¢ below the “reference price” of $3.70 a bushel for PLC. If it stays below $3.70, a PLC payment would be triggered.

As anyone who signed up after that 2014 Farm Bill remembers, the ARC program is a lot less straightforward. Payments are triggered by a combination of low prices and yields, with the price based on a five-year rolling average (tossing out the high and low years). ARC has two versions, one based on county average yields and one based on whole-farm yields of an individual producer. The county-level program pays on a higher percentage of a farm’s crop base and was more popular in the Corn Belt in the last farm bill signup.

ARC was designed to let producers down gently from a period of high prices. After the 2014 Farm Bill, many Corn Belt farmers bet on ARC over PLC. In some Iowa counties, Johnson says, farmers received ARC payments of $70 an acre in some years.

Now that commodity prices have fallen back to bargain basement levels with narrow margins, PLC may prove more popular, although it’s far too early to try to outguess the current marketing year to decide that.

“I think farmers are chasing $5 to $15 an acre,” for the 2019 crop, Johnson says.

For example, if corn stays at $3.59 a bushel and a PLC yield of 140 bushels an acre, multiply those two numbers by 85% of your corn base acres and you come up with a $13.09-an-acre payment.

Right now, soybean prices don’t look like they’ll trigger a PLC payment. The reference price for that crop is $8.40 a bushel. FAPRI projects a price of $8.43 for the 2019-2020 marketing year.

Meanwhile, Johnson and others are planning meetings this fall to refresh your memory on ARC/PLC and to go over changes in the new farm bill. One improvement is that you’ll be able to sign up for either ARC or PLC each year starting with the 2021 crop. So at least you won’t have the pressure of trying to outguess market prices for most of the life of the farm bill.

You can find helpful online calculators from the University of Illinois and Texas A&M here:

https://farmdocdaily.illinois.edu/2019/08/introducing-the-gardner-farmdo...

https://www.afpc.tamu.edu/

Kansas State University has a helpful list of frequently asked questions on the farm bill here:

https://www.agmanager.info/ag-policy/2018-farm-bill/frequently-asked-que...

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