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ARC-PLC Enrollment Deadline for 2021 is March 15

Farmers have until March 15th to make enrollment decisions for Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs under the 2018 farm bill for the 2021 crop year. For more information on ARC and PLC, including two online decision tools that assist producers in making enrollment and election decisions specific to their operations, visit the ARC and PLC website linked below.

More below:

https://www.fsa.usda.gov/programs-and-services/arcplc_program/index

https://arkansascrops.uaex.edu/posts/crop-insurance/rice-plc-march-deadline.aspx

Additional information and resources provided by Scott Stiles, economist with the University of Arkansas System's Division of Agriculture:

David Reinbott with University of Missouri extension put together the guidance below on ARC/PLC election. He also provides links to decisions aids that are available.

You'll notice in David's comments that PLC seems to be the preferred choice. This also allows the use of SCO or Supplemental Coverage Option.

In my opinion, soybean base could be enrolled in PLC as well. It's very unlikely that ARC or PLC would trigger for soybeans at today's price levels. However, if you're in a county that has both irrigated and non-irrigated soybean base, choosing ARC for farms with non-irrigated soybean base might be a good decision as county non-irrigated yields might dip low enough to trigger ARC. Generally, we don't see enough volatility in irrigated yields to make ARC work--that's especially true at current commodity prices. As in the past, ARC and PLC elections are made on a farm-by-farm and crop-by-crop basis.

Like a lot of decisions, they're made with imperfect information and without all the facts. Fortunately, whatever decision you make in choosing ARC or PLC only applies to the 2021 crop.

Scott

ARC and PLC Program Payment signup for 2021 - Deadline March 15, 2021

Sign-up for the ARC (Agriculture Risk Coverage) and PLC (Price Loss Coverage) programs for 2021 has begun. The deadline for making the election for these programs is March 15, 2021. This signup is for potential payments for the 2021 crop.

2021 Program Payment Selection
I will briefly give you my recommendations and reasons. You need to make your own decisions based upon your own price and market outlook and financial situation. I have also included more details on the program choices including online resources. USDA’s annual Agriculture Outlook Forum will be February 18-19, 2021 and will include their price outlook and projections for PLC payments. Therefore, what I have to say today may change after February 19.
Link to the Outlook forum. https://www.usda.gov/oce/ag-outlook-forum

For Peanuts, Seed Cotton, and Long Grain Rice I would recommend PLC. These three southern crops seem to be a better fit for PLC because of the high reference price and providing better income protection than ARC-CO.

Soybeans I would recommend ARC-County. The soybean reference price is $8.40 and is low in comparison to the other program crops and has not trigger a PLC payment in either the 2014 or the present 2018 Farm Bill. With the bullish outlook for soybean prices, I do not expect prices to average below $8.40.

Wheat I would recommend PLC. Except for the first year of the 2014 Farm Bill, wheat has paid a PLC payment every year. For 2020, the PLC projection is 65 cents but is still subject to change. In addition, wheat has had an ARC-County payment in most of the Southeast Missouri counties since 2014. I have not calculated an estimated ARC-county for 2020. Since wheat is more of a global crop, our prices are influenced on production in other countries. Also, in estimating ARC-county payments for 2021, I have found that it will take a drop in the county yield of 25% to 30% when compared to the 5-year Olympic Average county Yields to trigger a possible payment. Because of all these factors, I recommend PLC.

Grain sorghum I would recommend PLC. Except for 2014 and for 2020, Grain Sorghum has triggered a PLC payment every year. Grain Sorghum has made ARC-county payments in most of the Southeast Missouri counties every year beginning in 2014. However, the PLC payments have been greater. Grain Sorghum prices have experience strong prices and a positive outlook due to large purchases from China. How long this will continue is uncertain. Due to the high reference price of $3.95, I would recommend PLC.

Corn I would recommend PLC. Corn made ARC-county payments the first three years of the 2014 Farm Bill. Since then, the payments have been zero or just one or two counties triggered payments in Southeast Missouri. Also, as I was commenting about wheat, it will take a drop in the county yield of 25% to 30% when compared to the 5-year Olympic Average county Yields to trigger an ARC-County payment. The big question I have for all our commodities is how strong will prices be going into 2021 and beyond. If we have big crops in 2021, South America has a good crop in 2021 and 2022, and Chinese demand weakens, prices will go lower and could easily be below the reference prices. If your county yields are based upon all or non-irrigated, ARC-County could be a viable option due to the risk of lower county yields due to drought or other weather factors. If you want revenue protection if your county happens to have dry weather during the pollination period and results in reduced yields, ARC-County may be the choice instead of PLC.

Summary on Program Election choices for 2021.
My general recommendation is PLC on all the crops except for soybeans there I would select ARC-County. Peanuts, Seed Cotton, and Long Grain Rice for PLC and Soybeans ARC-County are the easiest choices. Wheat and Grain Sorghum are PLC choices due to the high reference prices. Corn is PLC unless your corn is non-irrigated and you believe the risk of a 25 – 30% drop in the county yield is possible due to weather.

Program details and background.
Producers have the option to enroll covered commodities in either ARC-County, ARC-Individual, or PLC. Program elections are made on a crop-by-crop basis unless selecting ARC-Individual where all crops under that FSA Farm Number fall under that program. These are the same program options that were available to producers during the 2019 and 2020 crop years. Producers may want to amend program election to better manage the potential risks facing their farms during the 2021 crop year.

PLC payments are made when the Marketing Year Average (MYA) prices are less than the reference price. PLC is generally selected when a producer is seeking protection from lower prices. ARC-CO payments are triggered when the actual county revenue (county yield X MYA price) of a covered commodity is less than the ARC-CO guarantee for the crop. ARC-CO is generally selected when a producer is seeking protection from lower revenues based on both county yields and price.

MYA prices are national prices determined by USDA and are based on monthly prices received by farmers throughout the marketing year, weighted by the monthly sales for the commodity. The marketing year differs for each crop. The marketing year for wheat is June 1–May 31. Long grain rice, peanuts, and seed cotton is August 1 – July 31. Corn, soybeans, and grain sorghum is September 1–August 31.

In most years, a majority of the cash sales takes place early in the respective crop’s marketing year, usually in the first 4-5 months. Therefore, the first half of the marketing year will have a greater impact on the MYA price. The final payments are generally made in October.

Reference prices are the following: Corn - $3.70; soybeans - $8.40; Wheat - $5.50; Grain Sorghum - $3.95; Peanuts - $0.2675 per pound; Seed Cotton - $0.3670 per pound; Rice (long Grain) - $6.30 per bushel.

Program Resources
Below are several excellent resources for making the crop program election decisions. The University of Missouri – FAPRI website is an excellent source for marketing year prices. The Texas A&M and Illinois web sites are very user friendly. Both web sites will require you to register before you can use them. The Texas A&M web site has all program crops to choose from but the Illinois web site only allows you to choose from corn, soybeans and wheat. Illinois and Kansas State have Excel spreadsheets that can be downloaded and includes all the program crops. Both spreadsheets are easy to use. The Kansas State spreadsheet displays a matrix table of PLC and or ARC-CO payments based on MYA prices and county yields.

Program Online Resources and Decision Tools.

1. University of Missouri

Food and Agricultural Policy Research Institute (FAPRI)

Marketing year price estimates, updated monthly

https://www.fapri.missouri.edu/

2. Texas A&M University

Ag and Food Policy Center

Decision tool using MU-FAPRI price estimates. Handles all program crops. Does not include ARC-IC. A separate spreadsheet for ARC-IC is available on request.

https://www.afp c.tamu.edu/

3. University of Illinois

FarmDoc, Gardner Program Payment Calculator

Decision tool offers allows user to select from four price paths. Easy to use for corn, soybean, wheat. Does not include ARC-IC.

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

4. Kansas State University

A simple spreadsheet tool to see trade-offs and break-points between ARC-CO and PLC with various prices and yields.

https://www.agmanager.info/ag-policy/2018-farm-bill/tradeoff-between-20192020-arc-and-plc

5. USDA-Farm Service Agency

Source of official farm program explanations, data, and maps.

https://www.fsa.usda.gov/programs-and-services/arcplc_program/index

6. 2018 What if tool Spreadsheet – University of Illinois
Spreadsheet calculates (ARC-CO), (PLC), and ARC-IC payments.
https://farmdoc.illinois.edu/2018-farm-bill

7. ARC or PLC? That is the Question – Kansas State University
Robin Reid, Ag Economist, has written an excellent article on the decision process of ARC or PLC for 2021.
https://agmanager.info/crop-insurance/risk-management-strategies/arc-or-plc-question