Did Farmers Get A Better Deal With ARC And PLC?

When the 2014 farm bill bumped the 2008 version, several changes occurred – most notably, eliminating Direct and Counter-Cyclical Payment (DCP) and Average Crop Revenue Election (ACRE) programs and replacing them with the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. How did farmers in different regions fare with these changes?

That question was recently asked by two Purdue University agricultural economists, Brent Gloy and David Widmar, writing for the Agricultural Economic Insights website. They found some significant differences when looking at the state-level payments of ARC and PLC in 2015 and 2016 relative to direct fixed payments from 2010 to 2013.

Areas including the upper Midwest, eastern Corn Belt, Northeast and Southeast have seen relatively higher payments, but Mid-Atlantic states and the Delta, Southwest and West fared relatively worse.

“Based on the map above, one can see why there are such large differences of opinion about the merits of the ARC/PLC program,” Gloy and Widmar note.

Nationally, ARC and PLC have made larger payments than the direct program payments that preceded them. But as Gloy and Widmar point out, “If you talk to many farmers, you will soon find out that payments for some producers have been relatively small.”

For 2017, ARC and PLC payments could rise to $8.6 billion, according to the USDA Economic Research Service.

“However, it is worth noting that this further increase is being driven by the rapid rise of payments under the PLC program, while payments under ARC continue to decline,” the economists note