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Weekly Farm Economics: First Look at PLC and ARC-CO for 2024

Author

Listed:
  • Paulson, Nick
  • Schnitkey, Gary
  • Batts, Ryan
  • Zulauf, Carl

Abstract

Because the 2018 Farm Bill was extended, farmers will have the same commodity title choices in 2024 as they have since 2019. These include the Price Loss Coverage (PLC), Agricultural Risk Coverage at the county level (ARC-CO), and ARC at the individual level (ARC-IC) programs. For the first time, the effective reference prices in 2024 for corn ($4.01) and soybeans ($9.26) will be above statutory references prices ($3.70 for corn, $8.40 soybeans). Wheat’s effective reference price will remain at the statutory level of $5.50. Those effective reference prices are well below 2024 ARC benchmark prices: $4.85 for corn, $11.12 for soybeans, $6.21 for wheat. As illustrated in the recently updated for 2024 Farm Bill What-If Tool — a Microsoft Excel spreadsheet — ARC-CO will trigger larger payments when county revenues are driven by low yields, while PLC payments may be larger with moderately low prices and higher yields, as well as in scenarios with extremely low prices. Payments from either PLC and ARC-CO remain relatively unlikely for corn, soybeans, and wheat, even with lower prices expected for 2024. There is a higher likelihood of ARC-CO triggering payments on corn and soybean base acres given the higher benchmark prices compared with PLC’s effective reference prices. However, PLC may be attractive if an individual is concerned about corn and soybean prices falling below $3.75 and $9.00 per bushel, respectively. In addition, producers interested in using the Supplemental Coverage Option (SCO) insurance program will want to enroll in PLC.

Suggested Citation

  • Paulson, Nick & Schnitkey, Gary & Batts, Ryan & Zulauf, Carl, 2024. "Weekly Farm Economics: First Look at PLC and ARC-CO for 2024," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 14(11), January.
    • Handle: RePEc:ags:illufd:358271
    DOI: 10.22004/ag.econ.358271
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    Keywords

    Agribusiness; Agricultural Finance;

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