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Making 2021 ARC/PLC decisions

By Steve Johnson - Columnist | Dec 9, 2020

Enrollment for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) program for the 2021 crop year is underway at your local Farm Service Agency (FSA) office. That decision is by FSA farm number and the historical base acres of crops on that farm and tract. The signup period runs through March 15, 2021. ARC/PLC is one of the USDA farm safety-net programs that can help producers with fluctuations in either revenue or price for certain commodity crops including barley, canola, large and small chickpeas, corn, crambe, flaxseed, grain sorghum, lentils, mustard seed, oats, peanuts, dry peas, rapeseed, long grain rice, medium and short grain rice, safflower seed, seed cotton, sesame, soybeans, sunflower seed, and wheat.

Local FSA offices are encouraging producers to take the time over the next few months to evaluate your program elections and enroll for the 2021 crop year. ARC provides income support payments on historical base acres when actual crop revenue declines below a specified guaranteed level. PLC provides income support payments on historical base acres when the final national average cash price for a covered commodity falls below its effective reference price which are $3.70/bu. for corn and $8.40/bu for soybeans, respectively.

2021 election and enrollment

Producers can elect coverage for the 2021 crop year and enroll in crop-by-crop ARC-County (ARC-CO) or PLC, or ARC-Individual for the entire farm. Although election changes for 2021 are optional, enrollment (signed contract) is required for each year of the program. If a producer has a multi-year contract on the farm and makes an election change for 2021, it will be necessary to sign a new contract.

Key to this decision will be the national average cash price outlook for the 2021-22 marketing year. That is because the final national cash price by crop will not be known until late September of 2022. It must fall below the effective reference price in order that a PLC payment be triggered. Most analysts expect those national cash price projections to be roughly $4.00/bu. for corn and $10.00/bu. for soybeans based on larger U.S. planted acres, normal growing conditions, and strong U.S. export demand. Since these projected prices are above the effective reference prices, then PLC payments would not be triggered for the 2021 crop year. As a result, most producers will likely elect and enroll both their corn and soybean base acres in the ARC-CO program to increase the likelihood of triggering an ARC/PLC payment.

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. Perhaps a few base acres could be enrolled in the ARC-Individual program that combines the entire farm’s crop base acres.

If your ARC/PLC decision is not submitted to your local FSA office by the deadline of March 15, 2021, the election defaults to the current election for crops on the farm from the prior crop year. For crop years 2022 and 2023, producers will have an opportunity to make new elections during those signups. Farm owners cannot enroll in either program unless they have a share interest in the farm.

Rather than waiting until the March 15 deadline, producers are encouraged to work with their local FSA office to make their election and enrollment decision early. This will help spread out the workload for your FSA office and allow more time to focus on any crop insurance changes for your 2021 crops. A new county-based revenue crop insurance product called Enhanced Coverage Option (ECO) can be added to your traditional multi-peril crop insurance coverage. The ECO product can be purchased regardless of your base acres having been enrolled in the ARC-CO program.

Steve Johnson is an Iowa State University Extension and Outreach farm management specialist. He can be reached at sdjohns@iastate.edu.

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