By Taylor Dill
The 2018 Farm Bill program decision for 2023 is due with your local FSA office on March 15. The programs that you have to choose from are Price Loss Coverage (PLC), Agricultural Risk Coverage County (ARC-CO) and Agricultural Risk Coverage Individual (ARC-IC).
You can make these decisions on an FSA farm-by-farm level. Producers can also make the decision on a crop-by-crop basis for ARC-CO and PLC. All crops on the Farm Service Agency farm and all FSA farms enrolled in ARC-IC in the same state are blended together when choosing ARC-IC.
Price Loss Coverage (PLC) makes a payment when the Market Year Average Price falls below a calculated Effective Reference Price: corn, $3.70; soybean, $8.40; and wheat, $5.50.
That payment is then multiplied by your individual FSA Farm Yield to generate a payment that is paid on 85% of commodity specific base acres. If you want Supplemental Coverage Option (SCO) you must choose PLC. This coverage is a county-based crop insurance product covering 50-86% of guarantee with higher subsidy levels and works in partnership with RP/YP crop insurance.
ARC-County makes a payment when the national price times the county yield for the year falls below a 5-year olympic average of prices and yield times 86%. That payment is then paid on 85% of commodity specific base acres. The payment is based on county yields, not your individual yields, so every county could have a different payment rate.
ARC-Individual is a completely different type of beast than what we are used to with ARC-CO, but the concept is basically the same. Your payments are triggered when actual revenue falls below a calculated benchmark using individual yields. Situations that would benefit from ARC-IC are 100% prevent plant acres (played a large role in 2019); FSA farms yields that are 15-25% below the historical 5-year FSA farm average of all crops; Farms that have high year-to-year variability such as river bottoms; and if there is a large acreage of fruits and vegetables.
How to choose
So, we have some great options for yield and price protection, but what is best for 2023?
The question we need to ask ourselves is which determination of our revenue are we more worried about, price or yield? If we believe that price is not going to fall drastically this year, then ARC-CO may be a better choice. This may especially be true if one believes that yields in 2023 may be affected by a widespread drought. However, if you choose PLC with SCO coverage, you will have price and revenue coverage as well, but this comes with added cost.
Regardless, we are not anticipating ARC or PLC to make a payment in 2023.
(Taylor Dill is an ag and natural resources educator for Ohio State University Extension in Darke County.)
