Nate Bruce, Farm Business Management Specialist, nsbruce@udel.edu
The signup deadline for the USDA commodity support programs Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) is fast approaching. Producers will need to elect their coverage decisions by March 15th. Signup is for 2022 production, with payments coming in September and October 2023 after the 2022 marketing year, if triggered.
Price expectations for 2022 are substantially higher than the PLC reference prices that are used as a price floor for grain. My general recommendation is to sign up for county ARC (ARC-CO) for corn, soybeans, and wheat base acres for 2022 because expected prices for 2022 are well above the reference prices. For those wanting to maximize potential payments, ARC-CO is the better option. County level problems, such as weather-related issues like drought or hurricanes that negatively impact yields and trigger ARC payments is far more likely than the national marketing year average price to fall below the reference prices this year. It should be noted that the likelihood of ARC payments is low because of the given expected market prices and neither PLC or ARC is likely to make significant payments in 2022.
This may be a year for producers to consider two new crop insurance options because of high price expectations for 2022 and also the low likelihood of ARC or PLC payments. The two policy options are SCO (Supplemental Coverage Option) and ECO (Enhanced Coverage Option). Both SCO and ECO are crop insurance policies and you will need to contact your crop insurance agent and not your county FSA office. Both SCO and ECO allow you to lock in more of your expected revenue by using a county crop insurance policy to cover part of your Yield Protection (YP) or individual Revenue Protection (RP) deductible. For more information on SCO and ECO check out the program links below:
SCO – Supplemental Coverage Option for Federal Crop Insurance Fact Sheet (usda.gov)