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Choosing Between ARC and PLC

Farmers are in the process of choosing between the ARC and PLC revenue protection programs. Dr. Paul Mitchell, the state specialist in cropping systems with the University of Wisconsin Extension Service, outlines the main differences between the two programs.

“PLC is like the traditional commodity support program. It’s a price support program. It puts a floor to national prices, $3.70 for corn and $8.40 for soybeans, and these have been around for a long time this kind of a program. ARC is a little newer. It’s still been around a while, but it’s a county revenue base floor, and it mixes that national price with your local county yields to create a floor at the county level for revenue. And so, each county is a little different whereas the national price for the PLC is the same no matter where you are in the U.S.”

Farmers need to do their homework to figure out which program works best for their specific operations.

“They like to have these two programs so farmers can select the one that works best for them. Traditionally, ARC, at the county level, has worked better in the Upper Midwest, whereas PLC has tended to work better in the South for some of those crops. But even that rule doesn’t always apply. Wheat is a good example there. A lot of those farmers like PLC, and it’s about a 50-50 split nationally on that crop.”

He says the choice isn’t as difficult this year because commodity prices are strong.

“This is not a major issue this year. That $3,70 floor for corn and the projected price is $5.70 for corn for the 2023 crop. That’s the national average price across the whole marketing year. At the Board of Trade today, December corn is trading $5.90. Soybeans are $13.90 and the floor is $8.40 for soybeans. That’s the same price we’re using to calculate those revenue guarantees for ARC. So, I’m telling farmers not to sweat it, but if you want to pick one, I’d pick ARC because there’s a likelihood that county yields are low, and you might trigger a payment in your county. But the likelihood of that is very small. And so, this is a year I wouldn’t sweat it. Pick whichever one you had last year if you’re fine with that, or if you want to really play the program and maybe maximize returns, ARC.”

Some farmers may be tempted to not participate in either program, but Mitchell says that’s not a good idea.

“You want to keep yourself in the program, the records there because you want to get your yields in there. You want your acres and all that kind of stuff because the new farm bill when it comes out, they upgrade these programs. You want to have your yields in there so you can raise your payment yields, so that, in the future, when the programs they’ve raised these floors, you’ll be eligible. The same thing you want your data in that system, you just want to participate. If you’ve got the base acres in your operation, re-enroll every year. It’s always better because then, in the future, you can apply for the new programs, whatever they are.”

Story provided by NAFB News Service and Brian Winnekins, WRDN, Durand, Wisconsin.
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