Since their inception in 2014, you’ve been choosing between Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC). You have until March 15 to make your choice this year.
You can see the price projections in the table below. Based on these price estimates, neither ARC or PLC will make a payment this year for corn and soybeans, says Paul Neiffer, a CPA who specializes in farm taxes.
“For 2023, if you have multiple farms, it might be wise to hedge your bets and elect PLC on some and ARC-CO on others,” he says. “Or, if you want SCO [Supplemental Coverage Option], make sure to elect PLC. The chances of either paying for corn and soybeans this year is remote.”
The effective reference prices and ARC-CO benchmark prices are well below expected 2023 prices. “Given price projections, receiving commodity title payments is unlikely,” adds Gary Schnitkey, University of Illinois Extension agricultural economist.
PLC: Price Loss Coverage is a crop-specific fixed price support program that triggers payments if the marketing year average (MYA) price falls below the commodity’s effective reference price.
- Payments are made on 85% of historical base acres.
ARC-CO: Agricultural Risk Coverage at the county level (ARC-CO) is a crop-specific program. It triggers payments if actual revenue (MYA price times county yield) falls below 86% of the benchmark revenue (product of benchmark price and trend-adjusted historical yield for the county).
- Payments are made on 85% of historical base acres.
ARC-IC: Agricultural Risk Coverage at the individual level (ARC-IC) is a farm-level revenue support program. Similar to ARC-CO, payments are triggered if actual revenue falls below 86% of the benchmark. If an FSA farm unit is enrolled in ARC-IC, information for all commodities planted in 2023 is combined in a weighted average to determine benchmark and revenues. If a farmer enrolls multiple FSA farms in the same state, all farms are combined to determine the averages for actual and benchmark revenue.
- Payments are made on 65% of historical base acres.
