Having a hard time deciding which FSA program to choose for your farming operation? Here’s a breakdown of what you need to know.
Price Loss Coverage: Price Loss Coverage (PLC) will make payments to farmers if a covered commodity’s national average marketing year price is below the reference price (for corn is $3.70, for soybeans it is $8.40, and for wheat it is $5.50). Payments are made on 85% of a farmer’s BASE acres. Farmers have been given a one-time opportunity to update their payment yield for this program. Even if you do not plan on enrolling in PLC in 2019 or 2020, we recommend that you update your yield in case you elect this program in future years.
Don’g forget, if you elect PLC, you are eligible for Supplemental Coverage Option policy, which covers a portion of your crop insurance deductible up to 86% on an area plan. Premiums for this are very reasonable and could be an economical way to protect your crops.
Individual Area Risk Coverage (ARC): Individual ARC pays out when the actual revenue from all covered commodities on the farm is less than the Individual ARC guarantee, which is based on the 86% of the farm’s actual yields and the higher of the national marketing year price or the reference price for the commodity (Reference prices for 2019/2020 are $3.70 for corn, $8.40 for beans, and $5.50 for wheat). Individual ARC pays you on 65% of the farm’s base acres.
County Area Risk Coverage (ARC): County ARC pays out when the county actual revenue is less than the County ARC guarantee, which is based the 5 year Olympic average of the county yields and the marketing year average price. County ARC pays you on 85% of the farm’s base acres.
Comparing the 3 FSA Programs:
|
|
PLC |
ARC Individual |
ARC County |
| Payout Acres | 85% of Base Acres | 65% of Base Acres | 85% of Base Acres |
| Price Coverage | Yes – As set by Farm Bill | Yes – Rolling 5-year Olympic Average | Yes – Rolling 5-year Olympic Average |
| Yield Coverage | No | Yes – Individual Farm Yield with all covered crops combine (whole farm unit) | Yes – County Yield |
| Individual Farm Coverage | No | Yes | No |
| Payment Cap | No | Yes – 10% of the Benchmark Guarantee | Yes – 10% of the Benchmark Guarantee |
| Affect on Crop Insurance Programs | None | No SCO available | No SCO available |
| Can Mix and Match Coverage | Yes – program is by crop and producers/land owners elect which base acres are enrolled | No – all crops and base acres are enrolled if chosen | Yes – program is by crop and producers/land owners elect which base acres are enrolled |
Electing a program: Program election for the crop years is 3/15. Starting in 2021, farmers will choose a program each year. It is important to remember that if a farmer does not inform FSA of their program election by the deadline, he will default back to the last program election.