The deadline for election and enrollment in USDA Farm Bill commodity programs is April 15, 2025. Farmers can choose Agricultural Risk Coverage at the Individual level (ARC-IC), Agricultural Risk Coverage at the County level (ARC-CO), or Price Loss Coverage (PLC). Payments for all programs are determined on "base acres," which reflect the historic acreage of a specific crop on a farm.
ARC-IC is less popular amongst farmers due to its 65% base acre payment and increased reporting requirements. Many farmers, therefore, choose between PLC and ARC-CO, both of which make payments on 85% of base acres.
PLC is a price protection program that triggers payments when the Marketing Year Average (MYA) price falls below the Effective Reference Price. In contrast, ARC-CO is a revenue protection program based on the National Marketing Year Average (MYA) price and county yield.
The MYA is the weighted average of the national price throughout the marketing year. The marketing year for fall-harvested crops generally starts in September and ends in August while wheat starts in June and ends in May. Waiting for the marketing year to conclude in order to calculate payments is why the payments, if any, come “a year late.” Let’s compare PLC and ARC-CO for irrigated corn in Scotts Bluff County.
Price Loss Coverage
The Effective Reference Price for PLC corn is $4.26 per bu. If the MYA price is below this level, PLC payments will be made. PLC payments will be the difference between the Effective Reference Price and the MYA price multiplied by the individual farm’s program yield, with no payment limit per acre. Therefore, the lower the price, the larger the payment per base acre. Producers should also know that if they have purchased Supplemental Coverage Option (SCO) insurance, the base acres associated with the corresponding crops covered by SCO should be enrolled in the PLC program since they cannot be enrolled in the ARC-CO program.
Agricultural Risk Coverage
ARC-CO’s payment trigger is more complex, as it depends on both the MYA price and county yield. This is a three-step process.
First, we must calculate the benchmark revenue for the county, by multiplying the 5-Year Olympic Average County Yield (171.51 for Scotts Bluff) by the National 5-Year Olympic Average MYA Price for corn of $5.03 per bu., resulting in a Benchmark Revenue for Scotts Bluff County of $863.70.
Next, we must calculate the maximum per acre payment for the county by multiplying the Benchmark Revenue ($863.70) by 10%, setting the max payment in Scotts Bluff County at $86.70.
Finally, we must calculate the Guaranteed Revenue, by Multiplying the Benchmark Revenue ($863.70) by 86%, which is $742.78 for Scotts Bluff County.
If the MYA price multiplied by the county yield falls below the guaranteed revenue ($742.78 for Scotts Bluff County), payments will be triggered. But remember, ARC-CO has a payment limit per base acre and in 2025/26 for irrigated corn in Scotts Bluff County it is $86.70.
When will ARC-CO payments trigger? For irrigated crops, significant drops in county yield are less likely than for non-irrigated crops. Taking this into consideration, I will assume an average county yield to illustrate an example. To calculate the price at which ARC-CO begins to provide support, by divide the Guaranteed Revenue ($742.78 per acre) by the benchmark yield (171.71 bu. per acre), which equals $4.33 per bu. Now let’s look at the consequences of the $86.37 per acre payment limit. With benchmark county yields, ARC-CO payments reach their peak at a price of $3.82 per bushel. In other words, ARC-CO protects prices between $3.82 and $4.33 per bu. assuming benchmark county yields.
PLC vs. ARC-CO
Choosing between ARC-CO and PLC depends on the specific circumstances of your farm, including base acres, crop type, and yield history.
For irrigated corn in Scotts Bluff County, ARC-CO offers a narrower price protection range, providing coverage between $3.82 and $4.33 per bushel when assuming benchmark county yields, with a cap on payments. Meanwhile, PLC provides broader price protection by triggering payments whenever prices fall below $4.26 per bu., with no payment limit per acre.
Ultimately, the decision comes down to whether you are more concerned with protecting against shallow revenue declines from price or yield losses or securing deeper price coverage. As the April 15, 2025 deadline approaches, carefully evaluate your farm's situation to determine which program offers the best financial security for your operation.
