ARC-PLC Extension Might Help Only A Few

March 31, 2015 12:00 PM
ARC-PLC Extension Might Help Only A Few

Only a few farmers are likely to benefit from the second extension to the farm bill program enrollment deadline announced Friday. That’s because at the time of the announcement, nearly 98% of eligible land owners already had updated yield and base acres, and 90% of farmers expected to sign up for Agricultural Risk Coverage (ARC) or Price Loss Coverage (PLC) had done so. Signups must be completed April 7.

An even higher percentage of acreage might be enrolled already, says Carl Zulauf, Ohio State University economist.

Power Hour Noon Logo“Producers with really small acreage may not bother,” Zulauf explains. “There is a transaction cost to making the decision, and for the potential of payout on small acre[s], the time and driving to the FSA office and so on may be quite high.”

He continues: “I would not expect 100% enrollment. Keep in mind also that since there is a default choice—you keep current bases and yields and are automatically enrolled in PLC if you don’t elect—some farmers who are satisfied with those choices may simply not bother.”

Producers continue to have the option of filing their intent to participate by April 7 and scheduling an appointment for a later time. Those who fail to enroll forfeit the right to 2014 payments, which will be made after the end of the marketing year. For the period from 2015 to 2018, they will automatically be enrolled in PLC.

Still Time For Revisions. Farmers already enrolled in a farm bill program may change their election based on changes in market expectations.

Originally, most university models showed a higher likelihood for payments from PLC in the first two of years of the program. Now, though, higher prices for some crops have reduced the likelihood of 2014 payments. In addition, large portions of the country had yields so far above Olympic averages they will not receive 2014 payments. That’s especially true for counties in the heart of the Midwest.

What U.S. Dollar Moves Mean For Ag

Because the enrollment decision will remain in effect for five years, producers should take a little time to run their own numbers.

For example, growers of grain sorghum should note PLC is likely to pay more than ARC-County over the five years, according to the University of Illinois/Ohio State University program at farmdocdaily. In addition, PLC signup entitles farmers to buy the Supplemental Coverage Option (SCO) for crop insurance. University of Nebraska economist Brad Lubben sees 75% crop insurance plus SCO as the optimum choice.

Additionally, the March 31 reports from USDA might cause some people to rethink their election, Zulauf notes.

“When the deadline was the same day [March 31], not too many would have been likely,” he says, “but with an extra week, a really big surprise might shift a few to do so.”

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