(upbeat guitar music)
- Agriculture is risky business.
Too much rain at the wrong time of year
could have as much effect as not enough rain
at another time of year.
And there are other kinds of risks beyond weather.
There's price changes, crop diseases,
government policies, and global markets.
All have an impact on whether or not producers
can really make a bottom line in any given year.
The US Farm Bill has different programs
that help producers manage those risks
and uncertainties that they face.
The primary programs are in the commodities title,
and are commonly called the Farm Safety Net.
These are the Agricultural Risk Coverage, or ARC programs,
and the Price Loss Coverage, or PLC programs.
Producers can enroll in either one or the other
of those programs, but not both,
depending on whether they want to cover
their revenue losses with ARC,
or price losses and drops in the market with PLC.
Now, while producers can choose one or the other
of these programs, they can combine them
with crop insurance, with certain limitations.
In this video, we're gonna dive
a little deeper into the ARC and PLC programs
in the Farm Bill, and find out more details
about how they can be used in your operation
to help you manage risks.
ARC and PLC only apply to certain row crops.
You'll need to look at the kinds of crops
you can sign up for in your specific county on your farm.
These crops have expanded from year to year
on what is covered.
The most recently added crop is seed cotton,
where seed cotton is defined as cotton that's
been harvested but is unginned,
containing both the seed and the lint.
For a full list of covered commodities,
talk to your FSA agent in your county.
Let's talk about each one of these programs,
ARC and PLC in a little more detail.
The ARC program protects against drops in revenue.
When the actual farm revenue drops below
a guaranteed revenue level, the ARC payment
will trigger in your county.
The ARC payment is calculated as
the difference between the guaranteed revenue
and your actual farm revenue, multiplied
by the base acres in your farm.
So let's pause for a minute and talk about
what are base acres?
Base acres are the acres that FSA records
as being planted to specific
covered commodities on your crop.
Base acres, on record for your farm,
don't have to match up to the actual planted acres
of the commodities that you plant in any given year.
The Price Loss Coverage, on the other hand,
protects against drops in the marketing year average price.
When the marketing year average price
falls below an effective reference price,
a PLC payment will trigger in your county.
The PLC payment is calculated as that difference
between the marketing year average price
and the effective reference price,
the yield per acre in your farm,
and the base acres on your farm.
Farmers that elect to ARC or PLC
in the 2019 crop year will be locking in their coverage
for 2019 and 2020, however starting in the 2021 crop year,
they'll be able to change their election from ARC to PLC
each year for the 2022 and 2023 crop years as well.
So what we've gone over today for ARC and PLC
is a pretty simple overview
of how those payments are calculated.
Obviously there's a lot more detail
behind these exact payments.
If you would like to look for your farm
on whether ARC or PLC would make more sense for you,
Oklahoma State University and Kansas State University
have worked together to create a decision tool
to assist in that decision.
This tool is based in Microsoft Excel,
it's easy to download and work right from your own home.
All you'll need is some of your paperwork
for Farm Service Agency.
So compare your options and make an informed decision
on whether ARC or PLC is right for you
to manage the risks on your farm.
As always, for more information,
you can talk to your local farm service agency
office, where they'll give you the exact details
and the exact records that you'll need
to make this decision.
(upbeat guitar music)