ARC or PLC? Six Alternative Crops to Consider

March 12, 2015 12:00 PM
 
ARC or PLC? Six Alternative Crops to Consider

Deciding which farm bill program is best can be hard enough for corn, soybean and wheat producers. But what if you grow other crops such as sorghum, legumes or canola?

The following breakdown comes from Paul Neiffer, aka The Farm CPA. Click here to read his analysis for corn, soybeans and wheat. You can also email questions to nbirt@farmjournal.com to be answered by Paul and Jamie Wasemiller of The Gulke Group on our upcoming March 17 farm bill webinar.

Power Hour Noon LogoSorghum. This crop has enjoyed some extra trade demand from China, which has propped up prices. However, will this continue over the next four years?  I am not sure, and you may want to consider an equal weighting of ARC and PLC.

Peanuts. PLC will be the decision for almost all peanut farmers.  The current make-up of PLC was almost specifically designed for peanut farmers.  They already have a built-in 2014 PLC payment exceeding $100 per acre in almost all cases, and this trend is likely to continue for all five years.

Rice. Farmers who grow this crop will probably make an election of PLC.  Their trends are similar to peanut farmers.

Legumes. This category includes dry peas, lentils and chickpeas. Large chickpeas enjoy a very high Olympic average compared to the reference price, so those farmers will lean toward ARC, while dry peas and perhaps lentils are trending closer to reference price.  Those farmers will lean toward PLC. If you grow both crops, this is an excellent chance to hedge your risks.

Barley and Oats. For growers with these crops along with wheat, I would tend to elect PLC to help offset any ARC elections on the other crops. This is truer for barley right now since it is much closer to the reference price than oats.

Seeds. Canola appears to be an easy choice for PLC since the current market year average (MYA) price is at least 3 cents under the reference price. On the other seeds such as sunflower, mustard, flaxseed, etc., the current MYA and future prices are slightly higher than the reference prices. You might lean toward PLC to prevent large price decreases, but if you have a large ARC payment for this year, you might tend toward that direction. Crambe appears to have a very high MYA price, therefore you might lean toward ARC on this crop.

No one can accurately predict the best choice between ARC and PLC. Ultimately, it comes down to your own risk profile and expectations for prices over a five-year period.  

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Comments

 
Spell Check

Zorcon
Western, NE
3/13/2015 08:39 AM
 

  Farmers need to write their representative and senators to voice their concern about being locked into PLC or ARC for the next five years when this should be an annual choice! Wake up producers!! Write your Congressmen!!!!

 
 

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