COLUMBIA, S.C. — The deadline for Agriculture Risk Coverage and Price Loss Coverage programs is quickly approaching, and U.S. farmers need to have their enrollment information completed by March 15, 2020.
Choosing between the programs can be both complex and complicated, especially understanding the differences in the two programs. Both offer the potential of receiving financial payments. However, payments are not guaranteed.
According to the U.S. Department of Agriculture Farm Service Agency, the ARC-CO program provides income support tied to historical base acres, not current production, of covered commodities. ARC-CO payments are issued when the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for the covered commodity.
PLC program payments are issued when the effective price of a covered commodity is less than the respective reference price for that commodity, according to USDA. The effective price equals the higher of the market year average price or the national average loan rate for the covered commodity.
How farmers can find the help they need
There are a lot of questions circling around the 2019, 2020 election for the programs. Thankfully, farmers unsure of which program to choose for their commodities have many resources out there to help make decisions on these programs.
Paul Neiffer, a principal with the public accounting firm CliftonLarsonAllen in Yakima, Washington, writes extensively about ARC/PLC and frequently advises farmers on which resources to use.
“There are multiple services farmers can use to help decide. Texas A&M University, University of Illinois and Kansas State University all have a service or calculator you can use,” Neiffer said.
Local FSA offices also offer information on choosing the right programs for certain commodities. You can find this information by visiting the USDA FSA website or by calling your local FSA office.
Walter Godwin, soy checkoff farmer-leader from Pelham, Georgia, uses his FSA office to make decisions on which program to choose for their commodities.
“Our county FSA office has run some of the numbers, and a lot of the time, PLC was the choice,” Godwin said.
The right program for your commodity
Each program favors a commodity differently. For example, a corn and soybean farmer may opt to use ARC for one and PLC for the other crop.
Neiffer advises soybean farmers to lean toward ARC payments for the 2019 and 2020 election.
“I think for the 2019 and 2020 election — which is what farmers have to do by March 15 — I’m leaning toward ARC. I don’t think there will be a PLC payment for soybeans,” Neiffer said. “For a lot of the growers in the Midwest, their yields for 2019 were down. And the price of soybeans were down. So, there’s a good chance there would be an ARC payment for the 2019 crop.”
Neiffer believes for the 2019 election, many areas across the U.S. could see an ARC payment for soybeans. However, other commodities may go the opposite direction.
“If you’re looking at which program is the best for wheat, cotton, sorghum, etc., PLC is a slam dunk for the 2019 and 2020 election,” Neiffer said.
Neiffer said that for crops such as corn and barley, choosing between the two programs is a toss-up; however, he’s leaning toward PLC.
“The rule of thumb we use on any commodity is, if the farmer has high, proven yields with the FSA, they are going to lean toward PLC.” Neiffer said.
“If they have low yields, they are going to lean toward ARC because that county yield is so much higher than theirs,” Neiffer continued. “If they received a payment, it would be substantially greater than the payment they might receive in a lot of cases.”
The 2019 and 2020 election for these programs will be here soon. It’s critical farmers know which program can provide the highest level of risk protection for their commodities. Using the above resources gives farmers an excellent chance at understanding and choosing the best programs for their farms.
–South Carolina Soybean Board