The Agriculture Risk (ARC) and Price Loss Coverage (PLC) programs provide financial protections to farmers from substantial drops in crop prices or revenues and are vital economic safety nets for most American farms. ARC and PLC programs were authorized by the 2014 and 2018 Farm Bills.
The election and enrollment period opened on Oct. 17, 2022, and runs through March 15, 2023. Producers can now make or change elections and enroll for 2023 ARC or PLC, providing future protections against market fluctuations.
Agriculture Risk Coverage
The ARC-CO program provides income support tied to historical base acres, not current production, of covered commodities. ARC-CO payments are issued when the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for the covered commodity.
Individual Agriculture Risk Coverage (ARC-IC) program payments are issued when the actual individual 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.
Price Loss Coverage (PLC)
PLC program payments are issued when the effective price of a covered commodity is less than the respective reference price for that commodity. The effective price equals the higher of the market year average price (MYA) or the national average loan rate for the covered commodity.
Election recommendations for Wisconsin farmers for the 2023 crop year, by Dr. Mitchell
Paul Mitchell, UW Madison Extension Agriculture Economist, indicates, “Expected prices for 2023 are well above PLC reference prices, so I recommend ARC-CO for corn, soybeans, wheat, and oats for Wisconsin farmers, but do not expect ARC or PLC payments for the 2023 season. Unless market expectations for 2023 change substantially in the next few months, I do not see my recommendation changing. However, if you want to buy SCO (Supplemental Coverage Option) crop insurance for corn, soybeans, or wheat, you will need to choose PLC for all base acres for each crop.”
Signup is for 2023 crops, with payments coming, if triggered, in September and October of 2024, (after the 2023 marketing year ends). Price expectations for 2023 are substantially higher than the PLC Reference Prices used as a price floor for corn, soybeans, wheat, and oats. As a result, ARC-CO is the better option for those wanting to maximize potential payments: county-level problems causing low county yields that trigger ARC payments are more likely than the national marketing year average price to fall below the reference prices. However, the likelihood and size of ARC payments are also quite low given expected market prices, thus I emphasize that neither ARC nor PLC is likely to make large payments for the 2023 crops.
Given the low likelihood of ARC or PLC payments and the high price expectations for 2023, this may again be a year to consider using two relatively new crop insurance options: SCO (Supplemental Coverage Option) and ECO (Enhanced Coverage Option). These policy options allow you to lock in more of your expected revenue by using a county crop insurance policy to cover part of your deductible for individual Revenue Protection (RP) or Yield Protection (YP). Note that if you want to purchase SCO for a crop, then you must enroll your base acres for that crop in PLC. Also, SCO and ECO are crop insurance policies, and so you will need to contact your crop insurance agent to buy them, not your county FSA office. Dr. Mitchell has created a short video explaining more details about SCO and ECO here: https://youtu.be/sApzsxiyO0g
See Dr. Mitchell’s ARC/PLC Resources Page https://aae.wisc.edu/pdmitchell/extension/arc-plc-signup/ for more resources, including videos explaining the logic for my recommendations, an overview of SCO and ECO, and recommendations for minor crops in Wisconsin.
Summary of recommendations for Wisconsin farmers for the 2023 crop year:
- Corn, Soybeans, Wheat, Oats: Signup for County ARC (ARC-CO), but if you want to buy SCO (Supplemental Coverage Option) crop insurance, then signup for PLC
- Sorghum, Barley, Sunflower Seeds: Signup for County ARC (ARC-CO)
Eligible producers can apply for ARCPLC by working directly with the Farm Service Agency (FSA) office at their local USDA Service Center. Applications will be accepted via mail, fax, hand delivery, or electronic means. Alternatively, producers with an eAuthentication account may apply for ARCPLC online.
Applications will be completed, electronically signed, and submitted directly to your local USDA Service Center through the online system. https://www.fsa.usda.gov/programs-and-services/arcplc_program/index
