Calculating ARC, PLC prices

March 15 is the deadline for the annual farm program enrollment decision. This year there is not much of a decision. With high commodity prices, Price Loss Coverage (PLC) payments will likely be zero for most crops. Agricultural Risk Coverage (ARC-CO) payments are also expected to be minimal. This article provides an overview of how ARC and PLC payments are calculated.

Farmers can elect coverage and enroll in ARC-CO or PLC on a crop-by-crop basis for each Farm Service Agency (FSA) farm unit. Farmers can also choose ARC-Individual for the entire farm for the 2023 crop year. Although election changes for 2023 are optional, enrollment by signed contract is required for each year of the program. If an election is not submitted by the deadline of March 15, the election defaults to the current election for crops on the farm from the prior crop year.

Commodity prices remain higher than reference prices, county yields are average or above

Commodity prices fall to below reference prices, county yields are average or above

Commodity prices remain higher than reference prices, county yields are average or above 1 2 3 4

Commodity prices fall to below reference prices, county yields are below average

ARC-CO, PLC, and ARC-IC are available for commodities covered under Title I of the a a a a a a a a

Farm Bill. These covered commodities include 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.

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.

PLC provides income support payments on historical base acres when the national marketing year average price for a covered commodity falls below its effective reference price. PLC effective reference prices are calculated to allow upward fluctuation of reference prices during periods when historic price averages are higher than the established reference price for the covered commodity. The effective reference price is the higher of:

• The statutory reference price stated in the 2018 farm bill; or

• 85% of the five-year Olympic average price, but capped at 115% of the statutory reference price. (Note: The Olympic average price excludes the high and low market year average prices from the 5-year period.)

Another option is the Individual Agriculture Risk Coverage (ARC-IC) program. Payments are issued when the actual 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.

NDSU Extension has developed an online tool to aid farmers in making this decision. NDSU’s ARC/PLC calculator helps producers estimate payments for farms and counties. The tool can be found at https:// www.ndsu.edu/agriculture/ag-hub/ag-topics/ farm-management.

Contact your local FSA office to make your ARC/PLC election. For more information on ARC and PLC, farmers can go to the FSA website at https://www.fsa.usda.gov/arc-plc or contact their local FSA office.

Article courtesy of Ron Haugen, NDSU Extension