Considerations for Choosing ARC or PLC for 2019/2020

(WASHINGTON, DC) The 2014 Farm Bill shifted farm support payments from programs with mostly fixed amounts to the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, which provide income support conditional on market outcomes. For both, payments occur when revenues or prices fall below a certain level. Since these programs are tied to market outcomes, both future payments to producers and the program costs to the Government are uncertain. As farmers prepare to signup, USDA’s Economic Research Service (ERS) prepared a report looking at the likelihood of payments being triggered in upcoming years. For corn and wheat, prices are expected to recover slightly from previous years, while soybean prices have declined due to recent trade uncertainties. These price movements impact not only the payments from each program but also the election choice of farmers. Projected prices above effective reference prices indicate higher payments from ARC than from PLC for corn and soybeans over the next 10 years. With wheat prices projected below the effective reference price, PLC will likely pay more per acre than ARC. The study focused on the three largest covered commodities by program area – corn, soybeans, and wheat – which make up 88 percent of the acres covered by the programs. In partnership with USDA, the University of Illinois and Texas A&M University are offering web-based decision tools to assist producers in making informed, educated decisions using crop data specific to their respective farming operations.