Farm Bill extension means producers have a March 15 deadline to make a decision between the Agriculture Risk Coverage and Price Loss Coverage programs known as ARC and PLC. Steve Johnson, retired Iowa State University Extension Farm Management Specialist, says it’s been running for about 10 years now. And in that time reference prices have not changed, $3.70 A bushel on corn $8.40 on beans.
The weighted average cash price for the entire marketing year had to be below those levels 370 corn and 840 beans but because they use an Olympic average calculation, and they’re using 18 to 22 prices. Both ARC and PLC will see higher prices being used to calculate these payments which is good for farmers.
The new ARC BLC adjustment has corn at $4.01 and soybeans at $9.26. Johnson thinks that should make the system more attractive. However, there is a big decision that he says should be made before choosing ARC or PLC.
Crop insurance. That’s the big safety net. So I think working early with your crop insurance agent is recommended because we’re going to see a drop in the projected price that simple average price for the month of February. And that drop compared to last year’s going to be probably more than $1 a bushel for corn and $1.75 for soybeans. So I think a lot of people are going to be scrambling saying hey, I can figure out how to increase my revenue guarantee if I stay with the same product the same level of coverage. I’m way short of guaranteeing any sort of profit.
One crop insurance decision, according to Johnson, farmers cannot take alongside the ARC county program, that is the Supplemental Coverage Option known as SEO.
If you are going to buy this county-based endorsement, it uses your county yields. It sits on top of your revenue protection decision. So if you’re trying to increase your revenue guarantee you might want to buy SEO, but you’ve got to be in the PLC program. So I think you start by going through the numbers, walk in with that information to your crop insurance agents. A lot of them have really powerful tools, and they’re going to be able to look at both the crop insurance decision and whether you’re going to purchase SEO. And then what would that mean.
Johnson says there are tools at the Iowa State University Extension website.