Decisions for 2021 ARC and PLC Coverage in Pennsylvania

Andrew Sandeen

Enrollment for 2021 Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) needs to be completed by March 15. Here is information to assist with crop coverage decisions in Pennsylvania.

Two programs available to U.S. crop producers through the Agriculture Improvement Act of 2018 are Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). Both programs provide financial risk coverage for any base acres previously designated for various commodities. Enrollment for the 2021 crop year is currently open, and program decisions will need to be documented with the Farm Service Agency by March 15.

Two variations of ARC are available, individual coverage (ARC-IC) and a county option (ARC-CO), and both deserve consideration. However, less than 4% of covered acres in 2019 were covered with ARC-IC, and there is less future payment potential for most farms relative to ARC-CO. This article will only focus on ARC-CO.

At no cost to producers, either ARC-CO or PLC coverage can be selected for each commodity. ARC-CO provides payments when average county revenue (yield x price) declines below a guaranteed level. PLC provides payments when the national average price is below an established reference price. Beginning in 2021, coverage decisions can be changed each year. The tricky part is selecting which type of coverage to sign up for when the crops have not been planted yet.

Below are two maps of Pennsylvania showing estimated ARC-CO breakeven yields for corn (Figure 1) and soybeans (Figure 2) in most counties. Using established 2021 benchmarks for price and yield, as well as an average market year price from recent years ($3.53/bu for corn; $9.15/bu for soybeans) for the unknown 2021/2022 prices, these estimated values represent the threshold under which ARC-CO would make payments.

Figure 1. Estimated breakeven yields for 2021 corn, using an average price of $3.53. The calculation: 86% (amount of benchmark revenue guaranteed with ARC-CO) x $3.70 (2021 benchmark price) x 2021 benchmark yield (unique to each county) / $3.53 (predicted actual 2021 price).

Figure 2. Estimated breakeven yields for 2021 soybeans, using an average price of $9.15. The calculation: 86% x $8.95 (2021 benchmark price) x 2021 benchmark yield / $9.15.

Be cautious. The actual numbers when all things are settled in 2022 will most likely be different. These estimates are presented for the sake of evaluating how ARC-CO might provide benefit and to demonstrate the variation from county to county. The further the actual county yield in 2021 falls below the breakeven yield estimate, the more likely ARC-CO coverage will provide significant payments.

Below is a table with a few key numbers for common crops in Pennsylvania. Note the projected 2020 prices for barley and wheat which are currently expected to trigger PLC payments because they are lower than the reference price.

* Data from USDA – Farm Service Agency
** Data from the USDA World Agricultural Supply & Demand Estimates report on February 9, 2021

For more information on ARC and PLC, visit the Farm Service Agency website or contact your local Farm Service Agency office.

There are some helpful online decision tools available. The Gardner ARC/PLC Calculator is one. As an example, using the standard forecast model and a PLC corn yield of 158 bushels per acre in Berks County, the Gardner calculator (as of 2/15/21) shows a slightly higher likelihood of payment and higher expected payment rate with PLC coverage as compared to ARC-CO coverage for 2021 corn. Another tool from Texas A&M University also projects more favorably with PLC coverage for corn in Berks County.

Do a little research and make your decisions by March 15 at your local Farm Service Agency office.