Factors to consider when signing up for ARC/PLC
Feb. 17 update: Less than one month remains until the 2022 ARC/PLC deadline. Visit the USDA website for more information on the program.
With sign-up open for USDA’s 2022 Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, Combest Sell & Associates* is reminding farmers of the programs’ basic rules. Additionally, the firm is reminding farmers about restrictions on the supplemental coverage option (SCO) available under PLC.
Now through March 15, farmers can enroll in ARC or PLC to secure future protection against market fluctuation. Both the 2022 ARC and PLC will be based on 2022 marketing year average (MYA) prices. Payments, if triggered, would be issued after Oct. 1, 2023.
According to Combest Sell & Associates, neither ARC nor PLC are expected to be relevant for most crops, given robust prices. However, insurance options, including SCO, might be more attractive or more apt to provide relevant support.
Here are the basic rules of ARC/PLC and highlights of restrictions on SCO. We would encourage all producers to talk through these options with their crop insurance agent.
2022 ARC/PLC election
- Sign-up period: Oct. 18 through March 15.
- One-year election for the 2022 crop year (new election next year for 2023).
- If no election is made, the farm will default to the election made for 2021.
- SCO cannot be purchased if ARC is elected
SCO
- SCO is purchased as an endorsement to the underlying crop insurance policy.
- Any crop enrolled in ARC is not eligible for SCO coverage on that farm.
- Provides coverage from 86% of producers’ actual production history (APH) down to the coverage level of the underlying APH or revenue policy.
- Follows the underlying policy in terms of yield or revenue loss but is triggered based on county losses rather than individual losses.
- Premium assistance for SCO is 65% of the premium.
Enhanced Coverage Option (ECO)
- ECO is purchased as an endorsement to the underling crop insurance policy.
- Participation isn’t dependent on ARC/PLC choice (i.e., you can have ARC & ECO).
- Provides coverage from 95% or 90% down to 86% (a 9% or 4% band of coverage).
- Works just like SCO (county-based coverage) except that it is just a narrow band and at the top.
- Premium Assistance for ECO is 44% of the premium when attached to revenue protection and 51% when attached to yield protection.
[More: View a fact sheet about ARC/PLC from Combest Sell & Associates]
WHIP+ disaster assistance could still be ways off
Additionally, Combest Sell & Associates and the Minnesota Corn Growers Association (MCGA) continue to closely follow the Wildfire and Hurricane Indemnity Program Plus (WHIP+) for 2020 and 2021.
In September, a new law was enacted that will provide $10 billion to the program, which provides payments to producers to offset losses from hurricanes, wildfires and other qualifying natural disasters. Combest Sell & Associates doesn’t expect USDA to roll out sign-up details for the program until 2022. We will keep you appraised as program implementation begins.
*MCGA is a client of Combest Sell & Associates
