Ag Policy Blog

ARC and the PLC Reference Price

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Just when I thought I knew a little something about these farm programs, I find out I'm wrong.

Last week, a farmer emailed me asking about the lowest price that can be used on Agricultural Risk Coverage in factoring the five-year Olympic average. I wrongly said ARC would always use the market-year average price and people should separate out the reference prices used for Price Loss Coverage.

A more astute reader told me I was wrong on that point. I sent back a long reply thinking the guy didn't understand that ARC was meant to be a more market-oriented program than PLC so you have to get it out of your head that the PLC price would be used in an ARC calculation.

Well, damn. I was wrong there. The PLC reference price also does serve as the ARC floor as well.

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It is in the final Farm Bill language, Sec. 1117, (c) (5) on ARC: REFERENCE PRICE, "If the national average market price received by producers during the 12-month marketing year for any of the five most recent crop years is lower than the reference price for the covered commodity, the Secretary shall use the reference price for any of those years ... "

A notice issued by the Farm Service Agency in May shows that the ARC floor price for every crop is the same as the reference price listed for Price Loss Coverage. If you read down about two-thirds of the way through the notice, it shows examples for ARC prices using market-year averages and replacing those with the reference prices for some of the major crops. http://www.fsa.usda.gov/…

if you really want to see how these programs will work on your farm, go to the decision tools created by the land-grant universities.

Texas A&M tool: https://usda.afpc.tamu.edu/…

University of Illinois tool: http://fsa.usapas.com/…

USDA's webpage on ARC-PLC: http://www.fsa.usda.gov/…

Follow me on Twitter @ChrisClaytonDTN.

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Comments

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Mr. Brandy
10/8/2014 | 8:23 AM CDT
The only mistake made was this overly complicated messed up portion of the farm bill. Must have been thought up by some Colorado and Washington congressmen during an evening of "Who can roll up the fattest doobie". Otherwise, how would you think up this stuff?
Bonnie Dukowitz
10/7/2014 | 6:36 AM CDT
I like people who have the courage to admit a mistake. There should be more.