104 – ARC or PLC which to choose in the FARM PROGRAM

Play

New farm podcast on the latest info on the FARM Program

I say episode 105 but it is 104.

Get into the FSA office now and prove your yields if you can and update your base acres if it is in your best interests to ARC PLC SCO FARM Programdo that.

Remember FSA has the actual rules not a lot of these other “experts” who may be giving you their own interpretation of the rules.

You also can use the “plug” yield in certain cases where you do not have any evidence of what the actual yields were.  Talk to a good FSA employee about what your options are.

You have to get your base and yield updates done before you decide which program option you want.

ARC or PLC which is better?

Depends on many factors or just a few factors depending on your situation.

In my neck of the woods most will take ARC county.  In other parts of the country with other crops PLC with the SCO insurance option will be the best option.

PLC with SCO may work in my neck of the woods on high risk farms for corn acres.

Remember you can elect different options on different crops on different FSA farms unless you choose ARC individual which would be all farms all crops thrown in together.

For me forget all the details and scenarios, ARC county will be the choice on all my farms and crops except maybe corn on a high risk farm.

One final thought on ARC vs PLC

Do not forget about payment limitations.  $250,000 per married couple.

So you are a big farmer lots of corn acres and you get a year with $50 per acre ARC payments.  At 5000 acres of corn you hit the payment limit.  Seen some big farmer cash flow predictions with 2015 crop year {paid in October 2016} payments of $60 per acre.  But, don’t forget you will limit out at $250K.

So if you have lots of acres you may want to hedge a bit and put “excess” acres in PLC.  So, if prices go completely to crap you get maximum payments early off of ARC and as the ARC formula goes down in the out years you pick up payments from PLC.  Of course if losses are very “shallow” through the entire farm bill you could leave $$$$$ on the table.

Remember ARC is revenue based, so if you were like me and your county had tremendous yields in 2014 we probably will not see a payment for the 2014 crop year since the bushels help make lots of revenue, even at lower prices.  If your yields were just so so you may get a payment in your county if the price average is not too high.

PLC is strictly price based.  For soybeans and corn at a price level that is way under what we have been getting the last several years.  But for other crops it may work very well.

About SCO insurance

I am still trying to get all the SCO details, but talk to a good crop insurance agent about this before you decide to go into PLC.

On my high risk farm if SCO works the way I think it will I will give up some potential ARC payments in return for a much better and more affordable crop insurance option on that farm.

More things to think about on proving yields

Double crop acres

Failed acres

Subsequent acres

they all need to be discussed with FSA

Get into your county office and get this started.  First of at least 3 trips.

Still need to sign up for which option you want after you update base and yields.

And then you still have to sign up for 2014 and 2015 actual farm program sign up.

You also have to get lots of landlord’s signatures.  Or use POA’s if you have them.

Editorialsecretary of agriculture vilsak

Vilsack has grand designs on where his career will go in the future.  I also think he takes a lot of advice from the farmers union crowd in Iowa.  He also holds lots of farm program decisions very close to his office.

He may be best remembered as the first Secretary of Agriculture that does not get a farm bill implemented for all farmers in a timely fashion.  Lots of deadlines coming up, FSA help is stressed and stretched thin.  Lots of veteran help has retired and morale is not high.

So as a farmer get into the FSA office and get this done ASAP.

One Comment

  1. Bill, thanks for the latest episode. That was so far above my head I thought I had better start taking notes. Even though I do not farm at that level, I definitely got something out of it. There was a consistent theme, which was all about planning. Certainly a crucial habit for any successful farmer or rancher to have, is the habit of planning. Your podcast definitely did a great service for large scale farmers in demonstrating just how sophisticated the business they are running is. It really helped to break down stereotypes that farmers are not extremely innovative and successful business leaders.

    February 6, 2015
    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *