What to consider prior to Mar. 15 ARC/PLC deadline

The below includes contributions from the U.S. Department of Agriculture

All farm producers with interest in the cropland must make a unanimous election in 2019 of either ARC-CO or PLC on a crop-by-crop basis; or ARC-IC for all covered commodity base acres on a farm. This election will apply to the farm for 2019 through 2023. Program election changes are permitted in crop years 2021, 2022 and 2023.

Failure to make a valid election in 2019 will result in a continuation of the program elected for 2014 through 2018 crop years for all covered commodities with base acres on the farm; and 2019 payments for those unelected covered commodities are prohibited.

The deadline to enroll in ARC/PLC is March 15, 2020.

Price Loss Coverage (PLC)

PLC program payments are issued when the effective price of a covered commodity is less than the respective effective reference price for that commodity. The effective price equals the higher of the national market year average price (MYA) or the national average loan rate for the covered commodity. The effective reference price is the lesser of 115% of the reference price or an amount equal to the greater of the reference price or 85% of the average of MYA prices from the 5 preceding years, excluding the highest and lowest price.

This new method of calculating the PLC payment rates will allow the effective reference price to be greater than the statutory reference price if the historic average of MYA prices is greater than the statutory reference price.

PLC payments are not dependent upon the planting of a covered commodity or planting of the applicable base crop on the farm. PLC payments, if triggered, will be paid on 85% of the farm’s base acres of each covered commodity with a PLC election where the farm has been enrolled. Payment will be issued after the end of the marketing year of the covered commodity, but not before October 1 of the year following the program year.

County Agriculture Risk Coverage (ARC-CO)

ARC-CO program payments are triggered when the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for the crop. The actual county revenue and the revenue guarantee are based on county level yield data for the physical location of the base acres on the farm and tract.

ARC-CO payments are not dependent upon the planting of a covered commodity or planting of the applicable base crop on the farm.

The ARC-CO benchmark revenue is the 5-year Olympic average MYA price multiplied by the 5-year Olympic average county yield. Benchmark yields and MYA’s will be calculated using the 5 years preceding the year prior to the program year. The ARC-CO guarantee is determined by multiplying the ARC-CO benchmark revenue by 86%.

The ARC-CO actual crop revenue is determined by multiplying the applicable actual county yield by the MYA price for the program year.

County yields for the benchmark and actual revenues will be based on the physical location and historical irrigated percentage of base acres on the farm and tract. If a farm has base acres physically located in more than one county or has a historical irrigated percentage for the covered commodity, the benchmark and actual crop revenues will be weighted and summarized based on those aspects to the farm level.

The ARC-CO payment is equal to 85% of the base acres of the covered commodity multiplied by the difference between the county guarantee and the actual county crop revenue for the covered commodity. Payment rates may not exceed 10% of the ARC-CO benchmark revenue.

Individual Agriculture Risk Coverage (ARC-IC)

ARC-IC program payments are issued when the actual individual crop revenue for all covered commodities planted on the ARC-IC farm is less than the ARC-IC guarantee for those covered commodities. ARC-IC uses producer’s certified yields, rather than county level yields. ARC-IC payments are dependent upon the planting of covered commodities on the farm. A producer’s ARC-IC farm is defined as the sum of the producer’s interest in all ARC-IC enrolled farms in the state.

The farm’s ARC-IC guarantee equals 86% of the ARC-IC farm’s weighted benchmark revenue. The ARC-IC benchmark revenue is the 5-year Olympic average revenue, which is the MYA price multiplied by the individual’s certified yield for each year in the benchmark period. A benchmark revenue is calculated for each planted covered commodity on the ARC-IC farm in the current year, weighed and summed across all covered commodities on the farm. The yields and MYA prices used in the benchmark calculation will be the 5 years preceding the year prior to the program year.

The ARC-IC actual crop revenue is determined by multiplying the MYA price by the individual’s certified yield, weighted and summed across all covered commodities planted on the farm in the current year.

The ARC-IC payment is equal to 65% of the total base acres on the farm, multiplied by the difference between the calculated individual guarantee revenue and the actual individual crop revenue summed across all covered commodities planted on the farm.

ARC-IC payment rates may not exceed 10% of the individual weighted benchmark revenue.

If in 2019 a producer had an FSN completely approved for prevent plant by FSA the actual year revenue would be $0. Farms with 100% prevent plant or very poor production should be considering ARC-IC.

PLC Yield Update

Owners will have a 1-time opportunity in 2020 to update PLC yields of covered commodity base crops on their farm, regardless of program election. The updated yield will be equal to 90% of the producer’s average yield per planted acre in crop years 2013-2017, subject to the ratio obtained by dividing the 2008-2012 average national yield by the 2013-2017 average national yield for the covered commodity. If the reported yield in any year is less than 75% of the 2013-2017 average county yield, then the yield will be substituted with 75% of the county average yield.

The deadline for updating yields is September 30, 2020.

2018 Map for ARC-CO Corn Payments

https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/arc-plc/pdf/all_corn.pdf

Decision Aids

https://www.afpc.tamu.edu/tools/farmbill/2018/

https://fd-tools.ncsa.illinois.edu/

https://www.ag.ndsu.edu/farmmanagement/tools

Did you like this article?

Share this post with your friends!