The sign-up period for the Agricultural Risk Coverage and Price Loss Coverage programs for the 2019 crop year is now open. USDA’s August announcement indicates producers interested in enrolling for the 2019 program must do so by March 15. Being in a rush to sign up is probably not a good idea, for several reasons.
These two commodity crop price support programs are provided by the 2018 Farm Bill and administered by the Farm Service Agency. There are some differences to consider with these latest versions compared to how these programs operated in the 2014 Farm Bill. This is the first time since the 2014 Farm Bill was implemented that corn and soybean producers have the option to switch their program elections — between ARC and PLC — when they enroll each year.
The ARC program provides support payments on historical base acres when actual crop revenue declines below a specific guaranteed level. The PLC program provides price support payments on historical base acres when the price for a covered commodity falls below its effective reference price.
Key considerations to help
Steve Johnson, Iowa State University Extension farm management specialist, has been meeting with FSA program specialists about these programs. In the following interview with Wallaces Farmer, Johnson explains the key differences and other things farmers should consider before enrolling for 2019.
What are the major changes to the ARC and PLC programs? There was a clear choice four years ago when farmers were signing up and had to decide between the two programs. Now there are additional differences in the rules, as specified in the 2018 Farm Bill. The choice doesn’t seem to be as clear. Four years ago, when farmers made this decision, 96% of the corn base acres in Iowa went into the ARC-County program. Farmers chose to enroll 99% of Iowa’s soybean base acres in ARC-CO. I don’t think ARC-CO will be the primary choice this time around, especially with low cash prices for corn and soybeans.
Also, these 2019 crop program payments aren’t going to be $70 per corn base acre like they were in 2015 and 2016. I think they’ll be more like $5, $10 or maybe $15 per base acre. So, I’m telling producers to lower their expectations regarding what they think they’ll get from the ARC-PLC program annually in 2019 and 2020.
FSA says these programs are now open for farmers to enroll, but farmers should not be in a hurry to do so. Choosing which program to sign up for is a decision farmers will probably want to make this coming winter. They have lots of time; the deadline is March 15, 2020. They can wait and see what the weighted-average national cash price projections for the 2019-20 crop year are going to be.
That midpoint right now, in the Sept. 12 USDA WASDE report, is $3.60 per bushel for corn and $8.50 for soybeans. Keep an eye on the upcoming WASDE monthly updates. Be patient in making your ARC-PLC decision, as you’ll be electing for both the 2019 and 2020 crop years simultaneously.
Why does the national cash price matter? That’s how both programs work. For determining a potential PLC payment, you subtract the weighted-average national cash price from the reference price of $3.70 for corn and $8.40 for soybeans.
Most farmers are going to wait, until perhaps January, to see that midpoint projected price in the WASDE report. If they can wait a little longer, maybe they’ll have a little better handle on county yields because ARC-CO uses the five-year county trended-yield average times the national price and compares it to that year’s actual revenue.
Attend one of the ISU Extension meetings addressing ARC-PLC decisions. Then make your choice by crop and by FSA farm number, probably in January or February regarding the ARC-PLC two-year election and enrollment.
Can you make an early guess, based on what we know now about 2019 yields, and where we are in terms of market prices, as to which of these farm program options farmers may want to elect and enroll? This is a two-year election as specified by the 2018 Farm Bill rules. That’s different than in 2014 and 2015, when we were dealing with a five-year election. It’s a two-year election and an annual enrollment.
If I were a producer and had to decide today based on the midpoint of the latest WASDE projections for 2019 crop corn and soybean prices, I’d say enroll your corn base acres in PLC and your soybean base acres in ARC-CO. However, that could completely change depending on the outcome of the 2019 harvest with the impact on national cash prices, county yields, and what happens with tariff and trade resolutions.
Again, no one knows for sure, but I think farmers will go with wherever the money is reflecting the 2019 crop, when deciding to enroll in a farm program. Keep in mind that if there are payments from USDA for the 2019 ARC-PLC programs, you won’t receive that money until October 2020. Farmers will need to make their two-year election first, then enroll.
Am I going to get money for the 2019 crop if I enroll in this program? If so, that’s probably the program I will elect and enroll in, prior to the March 15, 2020, deadline.
Will ISU Extension hold information meetings on ARC and PLC? ISU Extension farm management field specialists are partnering with USDA Farm Service Agency and the county FSA offices. We are planning on conducting up to 50 meetings to be held statewide in November and December. Producers have plenty of time to learn more about their farm program options and then make their ARC-PLC decisions.
You might have to drive 40 to 80 miles to attend one of these meetings, as we won’t be holding meetings in every county. Rather, we will hold them in various regional centers.
ISU Extension will also record videos and have them available online to help producers learn more about ARC-PLC decisions. We’ll have an ARC-PLC payment analyzer available online — a decision tool that allows you to plug in your estimated county yields for each year, as well as the midpoint of the national cash price projection.
You’ll be able to use this decision tool located on the ISU Ag Decision Maker website on your own. ISU Extension is partnering with FSA county offices as we hold the meetings for farmers during November and December.