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Agricultural Risk Coverage and Price Loss Coverage for the 2021 Crop Year

Enrollment for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs for the 2021 crop year opened in October, with the deadline to enroll and make amendments to program elections on March 15, 2021. This signup is for potential payments for the 2021 crop.

If changes are not made by the March 15th deadline, the election defaults to the programs selected for the 2020 crop year with no penalty. While it is optional to make changes to program elections, producers are required to enroll (sign a contract) each year to be eligible to receive payments. So, even if you do not change your program elections, you will still need to make an appointment at the Farm Service Agency to sign off on enrollment for the 2021 crop year by that March 15th deadline.

Producers have the option to enroll covered commodities in either ARC-County, ARC-Individual, or PLC. Program elections are made on a crop-by-crop basis unless selecting ARC-Individual where all crops under that FSA Farm Number fall under that program. These are the same program options that were available to producers during the 2019 and 2020 crop years. In some cases producers may want to amend program election to better manage the potential risks facing their farms during the 2021 crop year.

As you consider amending your program choices, here are some important reminders:

  • PLC payments are triggered by low prices. PLC is a disaster price program and pays when the marketing year average price is below a reference price. The marketing year average price (MYAP) is an average price calculated using cash prices across the nation over the course of a year. The 2021 marketing year for wheat is May, 2021 – June, 2022 and for corn and soybeans is August, 2021 – September, 2022. This means that the MYAP for 2021 for wheat will not be known until June, 2022 and the MYAP for corn and soybeans will not be known until September, 2022. PLC payments will only be triggered for a covered commodity if the MYAP published at the end of the marketing year are below the reference price. The reference price for corn is $3.70, for soybeans is $8.40, and for wheat is $5.50.
  • ARC-County payments are triggered by low county revenues. Revenues are calculated using the market year average price times the county average yield. When producers enrolled for 2019 and 2020, they were enrolling after the 2019 crop had been harvested. Yields for 2019 were known at the time of the enrollment deadline for that year. For the 2021 crop year, producers will be enrolling before the crop is planted.
  • Producers have less information about both price and yields for the 2021 enrollment period, compared to the last enrollment period. When producers enrolled for 2019 and 2020, we were more than halfway through the marketing year for each crop, so there was much more information on price expectation. For the 2021 crop year, producers will be enrolling before the marketing year begins.
  • The maximum ARC-IC payment is triggered in cases where an FSA Farm has 100% Prevent Plant acres. At the time of enrollment for the 2019 crop year, producers knew if they had FSA Farms that fit this description and were able to use that information to decide if ARC-IC was a good fit for a FSA Farm. For the 2021 crop year, producers will need to decide by March 15th if ARC-IC is still the right choice for those farms without knowledge of how many acres they will have in Prevent Plant. While some FSA Farms triggered large payments for ARC-IC in 2019, producers may want to re-assess this program election for the 2021 crop year if they do not expect to put those farms in 100% Prevent Plant in 2021.
  • For most producers, the number one consideration driving program election is the markets. What are markets going to do? We will not know the MYA price for corn or soybeans until September of 2022, and a lot could change in that time.

    OSU Extension and the Department of Agricultural, Environmental and Development Economics (AEDE) are offering several webinars between now and the March 15th enrollment deadline for producers to get up to date market outlook information. For information about AEDE’s 2021 Winter Outlook Meetings, visit https://aede.osu.edu/research/agricultural-policy-and-outlook-conferences/county-meetings.

    Additionally, OSU Extension will be offering two webinars this winter focused specifically on the ARC/PLC decision, reviewing decision-tool calculators available to evaluate options, and current market outlook. The dates for these webinars are January 13th from 1:00-3:00pm and February 25th from 9am-11am. Both programs are free to attend, but registration is required. Register online at: http://go.osu.edu/arcplc2021.

     

Crop Observation and Recommendation Network

C.O.R.N. Newsletter is a summary of crop observations, related information, and appropriate recommendations for Ohio crop producers and industry. C.O.R.N. Newsletter is produced by the Ohio State University Extension Agronomy Team, state specialists at The Ohio State University and the Ohio Agricultural Research and Development Center (OARDC). C.O.R.N. Newsletter questions are directed to Extension and OARDC state specialists and associates at Ohio State.