What is Agriculture Risk Coverage (ARC) & Price Loss Coverage (PLC) Program ?
The ARC and PLC programs were reauthorized for the 2019 through 2023 crop years by the Agriculture Improvement Act of 2018 (2018 Farm Bill). For the majority of American farms, the Agriculture Risk (ARC) and Price Loss Coverage (PLC) programs provide as essential financial safety nets by protecting farmers from substantial drops in crop prices or earnings.
The USDA Farm Service Agency (FSA) advises farmers to enroll in the Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC) programs by getting in touch with their local USDA Service Centers. An income support program called the ARC Program pays out when real crop revenue falls below a predetermined guarantee level. When the effective price for a covered commodity decreases below its effective reference price, the PLC Program makes income assistance payments.
There are 22 covered commodities, wheat, oats, peanuts, barley, corn, grain, rapeseed, sorghum, long grain rice, medium/short grain rice, seed cotton, dry peas, lentils, large and small chickpeas soybeans, sunflower seed, temperate japonica rice, canola, flaxseed, mustard seed, safflower, crambe, and sesame seed.
Farmers and landowners have three commodity title options available to them under the 2018 Farm Bill, ARC-IC (payment based on individual farm revenue), ARC-CO (payment based on county revenue) and PLC (payment based on market year average).
Objectives of ARC/PLC Program
Both the Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) commodity programs have different policy goals. Price Loss Coverage provides assistance when prices are low. Agriculture Risk Coverage provides assistance when transitioning from periods of high to low income.
How Does the ARC & PLC Programs Work ?
Effective reference prices shall be determined in accordance with the 2018 Farm Bill changes to allow for reference price fluctuations in periods where historical price averages are greater than the set reference price for the covered product.
Agriculture Risk Coverage (ARC) :
When a period of strong farm income is followed by a period of low agricultural revenue, ARC offers support. The ARC-CO program offers financial assistance based on historical base acres, not on the volume of covered commodities now produced. When the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for the covered commodity, ARC-CO payments are made.
When the actual individual crop revenue for all covered commodities planted on the ARC-IC farm is less than the ARC-IC guarantee for those covered commodities, payments under the Individual Agriculture Risk Coverage (ARC-IC) program are made. Instead of county-level yields, ARC-IC employs producer-certified yields.
Price Loss Coverage (PLC) :
A low price is one that is below a reference price established by Congress, and PLC is a national program that assists with low pricing. It is the most recent iteration of policies intended to shield farmers from the financial repercussions of low prices, a goal dating back to farm policies put in place during the 1930s Great Depression.
When a covered commodity's effective price is less than the corresponding reference price for that commodity, PLC program payments are made. The market year average price (MYA) or the national average loan rate for the covered commodity, whichever is higher, is the effective price.
Eligibility for ARC/PLC Program
Base acres on farms where all cropland has been totally planted to grass or pasture, including cropland that was idle or fallow, will be preserved, but no ARC or PLC payments will be made for those base acres from 2019 through 2023. Reconstitutions are not allowed to nullify or alter how base acres are treated.
Eligible Crops for ARC/PLC Program
The Eligible crops for ARC/PLC coverage include, barley, large and small chickpeas, corn, long grain rice, crambe, flaxseed, grain sorghum, lentils, canola, mustard seed, oats, peanuts, dry peas, rapeseed, medium and short-grain rice, safflower seed, sesame, seed cotton, soybeans, sunflower seed and wheat.
ARC/PLC Program Selection
Program selection can vary between FSA farms as well as crop by crop (by FSA farm number). Each farm's owners/landlords must decide together a course of action to take. By default, the program registered in 2020 will be chosen for covered crops if an election is not made by March 15, 2021. For the crop years 2022 and 2023, producers will have the opportunity to change programs down the road.
ARC/PLC Payments
To ensure that the program does not affect present production, payments will be provided based on the USDA's current base acres allotted to the farm, not the planted acres from 2022. All ARC and PLC payments are subject to an annual maximum per payment entity of $125,000. If activated, payments for the 2022 ARC and PLC will be made on October 1st, 2023.
Producers must annually enroll their respective share interest in covered commodities base acres in order to be eligible for payments. Enrollment will take place on a covered commodity by covered commodity base acre crop basis for 2020 and following years.
For further information, get in touch with the Farm Service Agency office at your local USDA Service Center.
ARC-PLC Calculator
The University of Illinois and Texas A&M University provide web-based decision tools in collaboration with USDA to help producers use crop data related to their individual farming operations to make well-informed decisions. Tools consist of :
The Texas A&M-provided ARC and PLC Decision Tool enables producers to gather fundamental knowledge about the choice and factors to consider, such as projected commodity prices and historical yields to calculate payments for 2022.
Gardner-farmdoc Payment Calculator, Producers can estimate payments for farms and counties for ARC-CO and PLC using a calculator provided by the University of Illinois.
ARC/PLC Program 2023 Crop Year Election
Beginning on October 17, 2022, and concluding on March 15, 2023, is the election and enrollment period. Producers can now join in 2023 ARC or PLC and make or modify their election choices, offering future protections against market changes.
Producers must annually enroll their respective share interest in covered commodities base acres in order to be eligible for payments. Enrollment will take place on a covered commodity by covered commodity base acre crop basis for 2019 and following years. It is not permitted to enroll less than 100% of a farm's covered commodities base acres. Producers had the choice in 2019 to choose a multi-year enrollment that is valid until the 2023 program year. The program's enrollment period runs from October 17, 2022, to March 15, 2023.
ARC/PLC Program Enrollment
Producers have the option to enroll in ARC-Individual (ARC-IC), which insures the entire farm, or ARC-County (ARC-CO), which offers crop-by-crop protection. Although producers are not required to enroll through a written contract each year, election modifications for 2023 are optional. Additionally, if a producer changes their election for 2023 while under a multi-year contract on the farm, they must sign a new contract.
Producers' election for crops grown on the farm remains the same if it is not submitted by the deadline of March 15, 2023. Unless they own a stake of the farm, farm owners are not eligible to engage in either program.
How to Apply for ARC/PLC Program ?
Producers that meet the requirements can apply for an ARC/PLC by getting in touch with their local USDA Service Center's Farm Service Agency (FSA) office. Applications may be submitted by mail, fax, delivery in person, or online.
As an alternative, producers having an eAuthentication account can submit an online application for ARCPLC. Through this online approach, applications will be filled out, electronically signed, and sent to your local USDA Service Center.
An eAuthentication account is necessary to log into ARC/PLC or any other program. Producers who are interested in learning more about setting up an eAuthentication account for online access should go to farmers.gov/sign-in.
Program year-specific data, including ARC/PLC payment rates, reference prices, and PLC substitute yields, are all provided in the Program Data section. To access the program data, click here.
For More Information
Visit the ARC and PLC webpage or get in touch with your local USDA Service Center for further details.
Frequently Asked Questions
What do base acres mean?
Based on historical crop production averages, a farm's base area and program yield are used to determine some government payments, such as ARC and PLC.
Are PLC yields updatable?
Regardless of program choice, owners had a single chance in 2020 (for the duration of the 2018 Farm Bill) to update PLC yields of covered commodities base crops on their farm.
How do I calculate ARC payments?
The difference between the estimated individual guarantee revenue and the actual individual crop revenue added across all covered commodities grown on the farm is equivalent to 65% of the farm's total base acres.
How to calculate PLC payment ?
When a covered commodity's effective price is less than the corresponding reference price for that commodity, PLC program payments are made. The market year average price (MYA) or the national average loan rate for the covered commodity, whichever is higher, is the effective price.
Which is better PLC or ARC?
PLC offers support at affordable rates. When income is shifting from a high income to a low income time, ARC offers assistance. Since 2020, when the US grain industry appears to have started a multi-year phase of rising income, the disparity in policy aims has become more significant.
Are payments for price loss coverage taxable?
These payments, which were made in response to a price drop or market disruption, will be taxed as regular income. Lines 4a and 4b of IRS Form 1040, Schedule F, are used to disclose payments made under government programs.
Exactly how are reference prices calculated?
Effective reference prices shall be determined in accordance with the 2018 Farm Bill modifications to allow for upward reference price fluctuation where historical price averages are greater than the established reference price for the covered product.
What is the payment schedule for ARC/PLC?
ARC-CO, ARC-IC, and PLC payments will issue if triggered:
- 2020 – after Oct. 1, 2021
- 2021 – after Oct. 1, 2022
- 2022 – after Oct. 1, 2023
- 2023 – after Oct. 1, 2024