Every year now farmers around the nation get to choose which of the safety net programs they’d like to use for each of their crops. Corn, soybean, & wheat farmers have until March 15 to revise these commodity title, ARC or PLC, decisions.
Up front, the default decision from year to year, should a farmer not make an update, is to use the previous year’s ARC and PLC choices. This year, 2022, it really doesn’t make too much difference, at least at current prices, which choice is made for either corn, soybeans, and to some extent wheat.
Commodity title payments should not be expected for either PLC or ARC-County says University of Illinois Extension Agricultural Economist Gary Schnitkey.
“If we are looking at 2022 and we are looking at very high prices, the chances of any of these commodity title programs making a payment is pretty small. So, (for example), PLC for corn you have to have market-year average prices below $3.70 and we would estimate that has about a 10% chance of happening next year. There is a chance that we could be below $3.70. That would be very bad, just so we all know. You could switch your corn to ARC County, however, if you do you that it will no longer be eligible for the SCO crop insurance program and it sort of a push as to whether you take PLC or ARC County. Are you more concerned about yield, in which case you would choose ARC County, or are you more concerned about price then choose PLC. It is just a toss up.”
That’s for corn. Soybeans is easier, though both could be talked through. The reference price is $8.40 and the market-year average price would have to be below that for PLC to pay. ARC County is the better bet there.
Schnitkey says he would tend to stick with PLC for wheat. Given the low probability of payments with current price projections, farmers may wish to base program selection on risk perception, considering if there is greater price risk or yield risk for the 2022 crop and marketing year. PLC is intended to address price risk while ARC-CO provides revenue protection, which incorporates yield risk.