Closer Look at ARC-PLC Payments

OMAHA (DTN) -- Farmers in counties that saw significant yield losses last year for their 2020-21 corn and soybean crops will see payments under the Agricultural Risk Coverage-County program this month.

Payments go out in October from the Farm Service Agency for ARC-County and Price Loss Coverage, as well as the 3.8% or so of acres that are enrolled in ARC-Individual. Payments are being made now for crops harvested a year ago with the marketing year now over. Payments will be paid on 85% of the base acres for that commodity.

While 23 commodities are eligible for ARC-County or PLC, nearly 84% of the 251.5 million base acres enrolled in the ARC/PLC programs are corn, wheat and soybean acres.

With higher overall prices and yields nationally for the 2020-21 crops, neither ARC nor PLC generated a high volume of payments except for wheat producers enrolled in PLC. Corn and soybean producers won't see any payments for PLC because of the overall higher prices for those commodities.

Under ARC-County, producers in some counties that saw significant yield losses generated payments. Some of that is due to ARC-County's five-year Olympic average price that eroded the guarantee during the recent stretch of years that had lower overall commodity prices.

"That's definitely the end-of-the-day story," said Robin Reid, an agricultural economist with Kansas State University Extension. "It had to be a fairly catastrophic county yield loss to trigger those payments."

CORN

USDA numbers show ARC-County had low enrollment in 2020 with just 17.8 million corn acres, or about 18.8% of corn base acres enrolled in ARC-County. Instead, producers had nearly 71.4 million acres, or 75.3% of base acres, enrolled in Price Loss Coverage.

The corn PLC reference price is $3.70 a bushel, but the 2020-21 national price came in at $4.53 a bushel, effectively shutting off those 71.4 million acres in PLC from collecting a payment.

Going back to last year's derecho that hit Iowa, farmers in a band of 10 Iowa counties from Guthrie to Linn County who enrolled in ARC-County will see payments that range from $19.06 per acre in Greene County, Iowa, to a high of $84.61 per acre for farmers in Marshall County. Marshall County had a benchmark yield of 229 bushels per acre but came in at 109 bpa.

Farmers enrolled in ARC-County for corn in Blaine County, Nebraska, also will receive a payment averaging $70.96 per acre as their yield last year collapsed countywide from 192 bpa to 98 bpa.

For farmers who enrolled in non-irrigated corn, a swath of producers in western Nebraska, western Kansas and eastern Colorado counties will see payments ranging from $18 to $26 an acre.

Farmers in a dozen Pennsylvania counties will see payments for corn ranging from $19.08 per acre to $59.32 an acre. Farmers in some Virginia and North Carolina counties will see payments as well.

Farmers in a handful of counties in southwest Missouri and southeast Kansas also will receive payments.

Allowed to change their enrollment for 2021, more than 43.7 million acres, or 47.2% of corn base acres, were signed up for ARC-County for 2021 with 47.6 million acres, 51.4%, staying in PLC.

"We have a lot more producers who switched to ARC-County with these higher commodity prices," Reid said.

SOYBEANS

Soybeans had 42.5 million acres in ARC-County in 2020, or 79.6% of soybean base acres.

The soybean PLC reference price is $8.40 a bushel, but the final average price came in at $10.80 a bushel, eliminating any potential payment for about 7.58 million soybean acres, or about 14.2% of soybean base acres.

Overall, few soybean counties nationally generated ARC-County payments, but some counties will see payments because of significant yield losses. A handful of counties in western North Dakota and eastern Montana range from $18 to nearly $28 an acre.

A handful of counties in southwest Missouri generated payments, as did a few counties in Kansas and Oklahoma.

In Pennsylvania, a cluster of five counties -- Blair, Centre, Juniata, Perry and Washington -- generated payments from $34.69 an acre to $45 an acre.

In 2021, the number of soybean acres in ARC-County increase to about 45.1 million acres, or nearly 86% of soybean base acres in ARC-County.

WHEAT

Wheat data came out earlier with the end of the 2020-21 wheat year. Just 3.8 million acres of wheat were enrolled in ARC-County in 2020, or about 6% of wheat base acres. Another 58.8 million acres were enrolled in Price Loss Coverage.

With the wheat PLC reference price at $5.50 a bushel and the 2020 national average price at $5.05 a bushel, PLC generated 45 cents per bushel for producers on their base acres.

Still, producers in a large number of counties also were eligible for ARC-County payments under wheat acres across the country, especially in Michigan, Ohio, Kentucky, Indiana, Illinois, Wisconsin and Minnesota. The payments range from a few dollars per acre to over $40 an acre in some counties.

2022 ARC-PLC OPTION

Like this past year, farmers will again be given the option for their 2022 planted crops to choose if they want to switch their base acres from ARC-County or PLC to the other program. That enrollment announcement has not been made yet by FSA, but the deadline coincides with the crop insurance deadline.

"In Kansas, it's March 15 when they will have to decide ARC or PLC for the coming crop year," Reid said. "With the projections out there for higher prices than our PLC payment rates, and we already saw in 2021 more acres going into ARC-County, so I anticipate seeing even more of that for 2022."

To drill down to specific county payment information, Kansas State University has a county mapping tool to look at payment rates nationally: https://www.agmanager.info/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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