(Posted Thu. Aug 21st, 2014)

On Thursday, the National Corn Growers Association and DTN hosted a webinar about new risk management options created under the 2014 farm bill, offering growers and landowners an early look into what the new programs will mean for them over the next five years.


Nearly 700 people signed up for the webinar. An archive of the audio, as well as printable materials, will be available on DTN’s website in the coming days. NCGA will send links to these materials when they become available.


“ARC or PLC choices: Which Farm Bill Contingency Plan Is Right for You?” featured insights from economists Carl Zulauf of Ohio State University and Gary Schnitkey of the University of Illinois, who explained the new programs and fielded questions from attendees. DTN executive editor Marcia Taylor served as moderator.


Professor Zulauf and Professor Schnitkey walked participants through the key changes in coverage options and the decision-making process farmers and landowners will go through, beginning in the coming months, when they update their base acres with their Farm Service Agency office. Farmers who do not reallocate their acres will maintain their current Direct and Counter-Cyclical Program base (either 1985-1989 or 2002-2006 allocations).


Later this winter, growers will then make a one-time choice between Price Loss Coverage and Agricultural Risk Coverage for their 2014-2018 crops. PLC is a price-only program; it does not pay on yield declines. ARC is a market-based program based on either county yields or individual yields; it pays when there is a revenue shortfall. Both programs calculate payments based on a reference price of $3.70 for corn.


Professor Zulauf summarized the decision question as follows:


  • Farmers should consider PLC if they believe that corn prices will stay below $3.70 for the next five years.
  • Farmers should consider ARC CO if they believe corn prices will NOT be significantly below $3.70 for the next five years.
  • Farmers should consider ARC IC if they expect their production levels to be highly variable.


PLC is the default commodity program; growers must opt-in to the ARC program. Tenants and landlords on a FSA farm must reach a unanimous decision on which program to elect. If no decision is reached and an election is not made, the farm defaults to PLC for 2015-2018 and forgoes payment for 2014. Tenants will need new written Powers of Attorney authorizations for program sign-up.


Experts currently project that corn acres in ARC will receive payment in 2014, but PLC will not.


The exact timeline for enrollment has not yet been released by USDA. This wait will give growers time to get a better sense of the market conditions, and make a more informed decision down the line, said Professor Schnitkey.


Schnitkey and Zulauf are currently developing an online simulator tool that will allow farmers to see how their individual situations would be affected in various scenarios, based on whether they choose ARC or PCL. NCGA will share this information as it becomes available.


Disclaimer: This information is provided for general information and educational purposes only, and is not intended to be, does not constitute, and should not be relied upon as, legal, accounting, tax, investment, or other professional advice or services. Because every situation is unique and fact-specific, you should consult a professional who can thoroughly review and analyze all aspects of your particular situation before making any decision or taking action.