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The Sun Sets on Agriculture Risk Coverage (ARC)
When President Trump signs the new farm bill into law, it’s sure to include Agriculture Risk Coverage, the popular farm policy innovation of the 2014 bill in corn and soybean country. But many farmers are expected to abandon ARC, created as the antidote for volatile market prices and high production costs, in favor of the traditionally styled Production Loss Coverage when given the chance.
Think tank FAPRI estimates 70% of corn base acres and 60% of soybean base will be enrolled in PLC in the new farm bill, compared with 93% of corn and 97% of soybeans in ARC currently. Wheat would join the stampede; 44% of wheat base is in ARC now but would zoom to 80%, says FAPRI.
“Much of this has nothing to do with philosophy but just with a simple comparison of expected payments,” says FAPRI Chief Pat Westhoff. “It appears to us that future PLC payments are likely to exceed future ARC payments for wheat and corn. It’s a tougher call for soybeans, or at least a tougher call if the trade dispute is resolved. My guess is that producer decisions will be very strongly affected by market conditions when people have to make the decision.”
Heading into negotiations over the final version of the farm bill, the Senate and House presented divergent ideas of how to tweak the farm program. The Senate favored ARC by making it the default choice during enrollment, by allowing growers to change between ARC and PLC in 2020, and by boosting the benchmark yields for ARC. The House leaned toward PLC by including an escalator clause that allows reference prices to increase as much as 15% if commodity prices show long-term improvement.
This article was produced in collaboration with the Food & Environment Reporting Network, an independent, nonprofit news organization producing investigative reporting on food, agriculture, and environmental health.