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New Year’s resolution

Make an ARC/PLC decision

By Steve Johnson - Columnist | Jan 5, 2021

Enrollment for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) program for the 2021 crop year runs through March 15, 2021. Local Farm Service Agency (FSA) offices are encouraging producers to evaluate their ARC/PLC program decisions for the 2021 crop year as soon as possible. That decision is by FSA farm number and the historical base acres of crops on that farm and tract. The ARC/PLC is one of the USDA’s farm safety-net programs that can help producers with fluctuations in either revenue or price for certain commodity crops including both corn and soybeans.

If your ARC/PLC election and enrollment 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 signup periods. Farm owners cannot enroll in either program unless they have a share interest in the crops on their farm.

Producers can elect coverage for the 2021 crop year and enroll in crop-by-crop ARC-County (ARC-CO) or PLC programs, or ARC-Individual (ARC-IC) 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.

While signup began last October, by mid-December only about 10% of the state’s producers had made an elected and enrolled their farms. According to the Iowa FSA state office, more than 150,000 ARC/PLC contracts will need to be processed.

With the Covid-19 pandemic, the process will not be as easy as it has in past years. The doors to your local FSA office are locked to the public. However, the staff are still functioning and ready for your ARC/PLC decisions. A producer will need to sign up either online or through email–the most widely used approach. After contacting your local FSA office, a staff member can email you the ARC/PLC program forms you need to sign. The producer will print, sign, and then scan the signed copies to email back to the office.

High crop prices impact on ARC/PLC

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.

Most market analysts expect those national cash price projections for the 2021 crop to be roughly $4.00/bu. for corn and $10.00/bu. for soybeans. Thus, PLC payments would not be triggered for the 2021 crop year. Consider the process of elimination–eliminating PLC if cash market prices seem too far above the Farm Bill’s effective reference prices.

ARC-CO program payments are triggered when the actual county crop revenue of a covered commodity is less than the 5-year revenue guarantee for that 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 statewide could be enrolled in the ARC-IC program that combines the entire farm’s crop base acres together.

As a result, most producers will likely elect and enroll most of their corn and soybean base acres in the ARC-CO program to increase the likelihood of triggering a payment. However, there is an interaction between ARC/PLC enrollment and the county-level crop insurance endorsement product called Supplemental Coverage Option (SCO). To buy SCO, the base acres on that farm must be enrolled in the PLC program for 2021.

Rather than waiting until the March 15 deadline, producers are encouraged to work with their local FSA office to make their ARC/PLC decisions early. Also, consider contacting your crop insurance agent if you are interested in purchasing the county-level endorsement product SCO in 2021. Consider adding these activities to your New Year’s Resolution list.

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

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