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Farm program breakdown: Price Loss Coverage or Agricultural Risk Coverage?

While farmers wait for Senate approval on the new farm bill, they can look at the risk-management options available in the new legislation. The options available include Price Loss Coverage and Agricultural Risk Coverage.

The PLC plan, developed by the House, uses reference prices (formerly target prices). Payments would occur if the average market price for the crop year is less than the reference price, says the Farmgate blog. Those prices are $5.50 for wheat, $3.70 for corn and $8.40 for soybeans.

The PLC plan carries eligibility for a special crop insurance policy, the Supplemental Coverage Option. The operator must shoulder the risk for a minimum of 14% of the loss.

The ARC plan, a Senate plan, will likely be a more preferred choice for Corn Belt farmers, says the Farmgate blog. The guarantee is 86% of a county-based yield formula multiplied by the national average price. Under this plan, payments would occur when actual crop revenue is below the guarantee for the year.

The Farmgate blog has more information on both program options in the new farm bill.


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