Enrollment for Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) is now open, and a new detailed report from Terrain shows ARC and PLC will offer higher support, for some, in 2025.
With Congress authorizing another one-year extension of the 2018 Farm Bill through Sept. 30, 2025 (besides more than $30 billion in ad hoc assistance to agricultural producers experiencing natural and economic disasters), crop farmers across the country now know what risk management tools are available to them for the new crop year.
The report from Terrain indicates for some crops such as corn, soybeans and wheat, coverage levels will increase to levels at or near all-time highs. In addition to crop insurance, crop farmers with eligible base acres may enroll in Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) on a commodity-by-commodity basis.
“For both ARC and PLC, and for the 2025/26 crop year, the prices used to determine the revenue guarantee and the effective reference price are based on data from the 2019 to 2023 crop years,” says John Newton, the Executive Head of Terrain who also authored the report. “With marketing year average prices for 2023 finalized in mid- to late 2024, and with the farm bill now extended for another year, ARC-County Option (ARC-CO) and PLC support levels for 2025 are now known.
What will the prices end up being for ARC or PLC? Terrain’s report provided this breakdown for several major crops:
- Corn ARC-CO: $5.03/bu.
- Corn PLC: $4.26/bu.
- Soybean ARC-CO: $12.17/bu.
- Soybean PLC: $9.66/bu.
- Wheat ARC-CO: $6.72/bu.
- Wheat PLC: $5.56/bu.
“For farmers with sorghum base acres, program payments are likely, as the support from both ARC and PLC is well above the USDA’s projected price of $3.80/bu. for 2025. For seed cotton, the ARC guarantee is approximately 10% above the effective reference price and may yield program payments if a county’s yields are low. For crops like rice or peanuts, their levels of income support are not materially different than those authorized under the 2014 farm bill over a decade ago,” says the Terrain report.
According to the Congressional Budget Office (CBO), total program payments for the 2025/26 crop year are projected at $5.4 billion.
Terrain says while program payments are far from certain, the Congressional Budget Office’s June 2024 Baseline Projections for USDA Mandatory Farm Programs provided an early look at potential farm program payments for the 2025/26 crop year.
According to the CBO:
- Total program payments for the 2025/26 crop year are projected at $5.4 billion
- With approximately $3.6 billion in PLC payments and $1.7 billion in ARC-CO payments.
The report notes this will chane as enrollment decisions become known.
- Corn is projected to receive $3.2 billion in program payments, or approximately $39 per base acre
- Soybeans are projected to receive $565 million in program payments, or approximately $12 per base acre
- Wheat is projected to receive $373 million in program payments, with an average payment of $7 per base acre
ARC or PLC? An Explainer from Terrain
Terrain’s report says ARC-CO is an area-based revenue and income support program that provides payments to farmers when the actual county-level revenue (the county average crop yield multiplied by the marketing year average price) falls below 86% of the benchmark revenue (that is, the revenue guarantee).
“The benchmark revenue, or revenue guarantee, is the product of the five-year Olympic moving average price and the county average trend-adjusted yield,” says the report. “The five-year Olympic averages remove the highest and lowest values and then average the remaining three values. To address low commodity prices, or large yield declines at the county level, the five-year Olympic average uses “plug” prices and yields — equal to the effective reference price and 80% of a county’s transitional yield, respectively. The use of plug values reduces variability and smooths the revenue guarantees available under ARC-CO.”
It’s key to note the program payments under ARC-CO are capped at 10% of the benchmark revenue, and program payments are made on 85% of the farm’s base acres of the covered commodity.
ARC-CO is based on county-level crop revenue, while PLC is soley based on price.
“The 2018 farm bill created the effective reference price to allow statutory reference prices, and the corresponding support level, to increase following high commodity price environments like the one grain and oilseed farmers recently experienced” says the report. “The effective reference price is equal to the maximum of 85% of the five-year Olympic moving average price (without plug prices) and the effective reference price and is capped at 115% of the statutory reference price.”
Terrain gave this example for corn:
- Corn has a statutory reference price of $3.70/bu. and a maximum effective reference price of $4.26/bu. (115% x $3.70).
“When program payments are triggered under PLC, the total payment to the farmer is based on 85% of the farmer’s base acres and the farmer’s farm-level PLC yield. PLC payment rates are capped at the difference between the effective reference price and the USDA’s marketing assistance loan rate,” says the report.
