ARC or PLC? How should soybean growers choose?
Farmers are weeks away from having to decide on farm program participation, including whether they’ll be best suited by Agricultural Risk Coverage (ARC), or Price Loss Coverage (PLC). For background, Jack Davis, South Dakota State University Extension crops business management specialist at Mitchell, defines PLC as a fixed price support program. “It triggers payments if the marketing average falls below the effective price that has been set for that commodity,” said Davis, during an interview comparing the two risk management programs.
On the other hand, the Agricultural Risk Coverage – or ARC program is revenue-based. “ARC triggers if actual revenue is below the benchmark revenue,” he said. “And those are calculations that are kind of behind the scenes.”
Both programs, PLC and ARC, are commodity-specific, meaning a producer decides separately which is best for corn, soybeans, and wheat. The sign-up deadline is the middle of next month, but even if a farmer has already chosen PLC or ARC at the Farm Service Agency office, changes can be made prior to the deadline. “They can make changes up until March 15th, so March 15th will be the deadline for the 2023 crop year.”
Producers who choose Agricultural Risk Coverage can select either individual whole farm-level revenue protection or county-level revenue protection, ARC County Option (ARC-CO). In the case of soybean growers, ARC-CO provides protection if soybean yield, and therefore revenue, falls below a specific benchmark established for each individual county.
“ARC County fits the best for soybean producers, for the soybean crop, and the reason is that on the price protection, on the PLC program, that effective reference price is at $8.40 per bushel of soybeans, and that’s low, we would not expect the ’23 crop to fall below that, so there’s very, very little chance that you would get anything on the Price Loss Coverage,” Davis explained. “So ARC County makes a better choice because you have some county protection if you have yield issues in the county, so it provides some protection for yield.”
Davis concludes that soybean price projections for 2023 are significantly higher than the price at which a PLC payout would happen. “There’s probably little chance of getting paid on either [ARC-CO or PLC], but if your county would happen to have a disaster, either completely dry out, or another one that’s happened in recent years is these derechos,” he said, “so if the county got hit hard there could be a chance with yields being low that you could receive some entitlement with ARC County.”