Farm Bill Primer: ARC and PLC Support Programs

Farm Bill Primer: ARC and PLC Support Programs

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Updated August 17, 2017
Farm Bill Primer: ARC and PLC Support Programs
Background
current-year county yield and SAFP is below the revenue
The 2014 farm bill (Agricultural Act of 2014, P.L. 113-79),
guarantee. The per-acre payment rate is capped at 10% of
created two new types of crop support programs, Price Loss
the ARC-CO county revenue guarantee.
Coverage (PLC) and Agricultural Risk Coverage (ARC), to
provide income support at levels above the price protection
Figure 2. County-Level ARC-CO Payment Formula
offered by the marketing assistance loan (MAL) program’s
loan rates. See CRS Report R43448, Farm Commodity
Provisions in the 2014 Farm Bill (P.L. 113-79).
Producers were given a one-time choice between PLC and
ARC, depending on their preference for protection against a
decline in either (a) crop prices or (b) crop revenue,
respectively. The selection was for the five-year duration
of the 2014 farm bill—the 2014 through 2018 crop years.
Furthermore, producers could elect ARC at either the
county (ARC–CO) or individual farm (ARC–IC) level.
PLC and ARC-CO choices could vary across “covered”
crops (listed in Table 1), whereas ARC-IC includes all
“covered”

crops on a farm under a single farm-level
Source: CRS
revenue guarantee. Participation is free. For both ARC and
PLC, payments are decoupled—that is, payments are made
Individual-Level ARC (ARC-IC)
on 85% of a crop’s historical “base” acres rather than actual
production (see Table 1 notes for details on base acres).
Instead of an ARC-CO revenue guarantee on a crop-by-
crop basis, farmers could select a farm-level guarantee that
Price Loss Coverage (PLC)
includes all covered crops on a farm. A single, whole-farm
guarantee (and payment) is calculated as a weighted
PLC price protection is based on a statutorily fixed
average for all crops (not on a crop-by-crop basis).
reference price. PLC makes a payment when the national
Payments are made on a reduced 65% of base acres.
season average farm price (SAFP) is less than the reference
price (Figure 1).
Participation Varies by Program Crop
Figure 1. PLC Payment Formula
Producer elections varied widely across eligible program
crops (Table 1). At the time that the 2014 farm bill was
written, it was clear that ARC-CO would make significant
payments through 2017, primarily because of high
commodity prices during the 2012 to 2014 period, but that
payments would decline substantially in later years as
commodity prices subsided under productivity gains,
assuming normal weather. As a result, producers of the two
largest program crops—corn and soybeans—elected 93%
and 97% of their respective base acres to participate in
ARC-CO, making it the largest revenue program in terms of
total base acres eligible for payments. Rice and peanut
producers were nearly unanimous in selecting PLC. Few
producers—1% of base acres—selected ARC-IC.
Eligibility Criteria and Payment Limits
Source: CRS
Producers must meet eligibility requirements to participate
Notes: See Table 1 notes for details on program yields.
in PLC and ARC and are subject to annual payment limits.
(For details, see CRS Report R44739, U.S. Farm Program
County-Level ARC (ARC-CO)
Eligibility and Payment Limits.)
ARC-CO crop revenue protection is based on a five-year
More Information
Olympic moving average (removing high and low years) of
county yields and national SAFP. The revenue guarantee
For more analysis on the farm safety net, see CRS In Focus
for ARC-CO equals 86% of the benchmark revenue—the
IF10191, Overview of Farm Safety Net Programs; and CRS
product of average county yields and average national
Report R44914, Farm Safety-Net Payments Under the 2014
prices (Figure 2). A payment is made if the product of
Farm Bill: Comparison by Program Crop.
https://crsreports.congress.gov

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Table 1. Farms and Base Acres Electing ARC or PLC by Crop
Election of
Percentage of

Base Acresb
Base Acres
“Covered”
Number
ARC-
ARC-
ARC-
ARC-
Crops
of Farms
Base Acresa
PLC
CO
IC
PLC
CO
IC
Corn
1,363,342
96,768,447
6,388,066
90,057,276
323,106
7%
93%
0%
Wheat
802,482
63,699,144
27,045,581
35,394,613
1,258,950
42%
56%
2%
Soybeans
1,062,142
54,514,972
1,688,365
52,635,553
191,053
3%
97%
0%
Grain Sorghum
230,382
8,979,430
5,965,661
2,998,211
15,557
66%
33%
0%
Barley
111,277
5,185,717
3,876,590
1,127,214
181,913
75%
22%
4%
Long Grain Rice
29,278
4,014,721
4,007,809
6,912
0
100%
0%
0%
Oats
197,770
2,095,226
671,385
1,410,063
13,778
32%
67%
1%
Peanuts
49,356
2,020,243
2,013,443
6,781
18
100%
0%
0%
Sunflowers
28,009
1,650,954
920,546
710,724
19,683
56%
43%
1%
Canola
17,420
1,476,317
1,436,766
31,814
7,736
97%
2%
1%
Japonica Rice
2,041
575,194
355,082
197,020
23,092
62%
34%
4%
Dry Peas
7,635
441,890
196,636
219,471
25,783
44%
50%
6%
Flaxseed
5,506
230,292
151,080
116,798
19,185
63%
36%
1%
Lentils
3,590
287,063
145,584
82,871
1,837
53%
41%
7%
Medium Grain Rice
14,097
173,824
167,293
6,532
0
96%
4%
0%
Safflower
1,963
99,068
62,521
33,401
3,145
63%
34%
3%
Large Chickpeas
1,246
85,634
19,412
56,636
9,587
23%
66%
11%
Mustard
609
24,715
3,845
9,431
1,439
56%
38%
6%
Small Chickpeas
436
22,067
5,004
15,006
2,057
23%
68%
9%
Sesame
191
5,206
4,378
828
0
84%
16%
0%
Crambe
116
2,603
1,698
889
16
65%
34%
1%
Rapeseed
115
2,481
1,100
1,335
45
44%
54%
2%
Subtotal
1,760,345
242,355,206
55,137,845
185,119,381
2,097,981
23%
76%
1%
Generic Basec
194,224
17,582,910

8,249

Total
1,760,345
259,938,116
55,137,845
185,119,381
2,106,275

Source: USDA, Farm Service Agency.
a. Base acres are the historical acres for each program crop that has participated in USDA farm programs, as defined by the 2014 farm bill
(Section 1112). Similarly, “program” yields (used in the calculation of farm-level PLC payments—see Figure 1) are historical yields for
each program crop that has participated in USDA farm programs (Section 1113). For more information, see CRS Report R44914, Farm
Safety-Net Payments Under the 2014 Farm Bill: Comparison by Program Crop, p. 11.
b. Farms elect ARC-CO and PLC on a crop-by-crop basis. A given farm may have elected PLC for some crops and ARC-CO for other
crops. If a farm chooses ARC-IC, all base acres on the farm (regardless of crop) are elected for ARC-IC.
c. Generic base is former upland cotton base. Note that no data appear in the PLC or ARC-CO columns associated with this generic base.
This is because covered crop plantings are allocated to the generic base acres on the farm each year depending on that year’s actual
plantings—thus, generic base allocation likely changes from year to year, unlike PLC and ARC-CO where base selection was a one-time
choice for the duration of the 2014 farm bill. In contrast, ARC-IC is a whole-farm program and the generic base of the farm (as well as all
other covered crop bases) is associated with ARC-IC.
Randy Schnepf, Specialist in Agricultural Policy
IF10711
https://crsreports.congress.gov

Farm Bill Primer: ARC and PLC Support Programs

Disclaimer
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