By Kent Thiesse
Farm operators in United States overwhelmingly selected the Price Loss Coverage (PLC) farm program choice for 2019 and 2020 for most eligible commodity crops, except soybeans. The Agricultural Risk Coverage-County (ARC-CO) farm program choice was the predominant choice for soybeans for the 2019 and 2020 crop years. The most dramatic shift was the large number of corn base acres that were enrolled in the PLC program choice for 2019 and 2020, compared to the 2014-18 farm program choice when a large majority of corn base acres were enrolled in the ARC-CO program. The other farm program choice was the Agricultural Risk Coverage-Individual Coverage (ARC-IC) program, which saw increased enrollment in Minnesota, North and South Dakota. USDA recently released the results of 2019 and 2020 farm program sign-up, which ended earlier this year.
The potential ARC-CO program payments are based on a combination of the 12-month national market year average (MYA) prices for a crop and the average county yields for a given crop for that year. The ARC-IC program payments are calculated in the same manner, except utilizing farm-level annual crop yields. The PLC program payments are based on only the MYA price, compared to crop reference prices. PLC payments occur in any year that the MYA price for corn is lower than $3.70 per bushel, $8.40 per bushel for soybeans, and $5.50 per bushel for wheat.
The MYA marketing year for corn and soybeans runs from September 1 in the year of harvest until August 31 the following year. Any farm program payments occur in October of the year following harvest. (For example – 2019 farm program payments would occur in October, 2020.) Farm program payments are paid on 85 percent of crop base acres for the ARC-CO and PLC program, but only on 65 percent of base acres for the ARC-IC program. This probably accounts for the limited enrollment in the ARC-IC program, unless a producer is fairly certain that will earn substantial ARC-IC payments compared to PLC and ARC-CO payments for a given year.
National Farm Program Sign-Up Results
For the 2019 crop year a total of 253 million crop base acres in the U.S. were enrolled in the PLC, ARC-CO and ARC-IC farm program choices for the various eligible crop commodities. Following are the results of the farm program sign-up for the 2019 and 2020 crop years, listing the total base acres enrolled and (percentage) of crop base acres enrolled in each farm program option:
ARC-IC = 9.8 million acres (4%).
ARC-IC = 5.6 million acres (5.9%).
ARC-IC = 3.4 million acres (6.2%).
ARC-IC = 39 thousand acres (1.9%).
By comparison, farm program enrollment for major crops for the 2014-2018 crop years were:
Some observations of the 2019 and 2020 farm program enrollment data:
The high level of enrollment in the PLC program for corn, wheat and other crops for the 2019 and 2020 crop years, as well as the relatively high enrollment in the ARC-CO program for soybeans, seems to suggest that many producers did their “home-work” to make the best choice for their farms. It also suggests that cash flow levels in corn and soybean production are very tight in many areas, and that having the likelihood of fairly substantial payments in 2020 (2019 crop year) and 2021 (2020 crop year) looked very attractive to reduce overall financial risk. The 2019 farm program payments in October this year will help many Minnesota crop producers that were impacted by poor crops in 2019. The good news is that starting with 2021 crop year, the farm program choice will become an annual decision and farmers will not be “locked-in” for multiple years.
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