Don’t make the wrong PLC/ARC decision for your farm – 2018 Farm Bill ramifications vary greatly from the past
Attending a 2018 Farm Bill meeting will help farmers choose the best program for their farm’s unique situation.
Jonathan LaPorte and Roger Betz – January 8, 2020
Many Michigan farmers have chosen to forego 2018 Farm Bill meetings across the state, erroneously thinking that what has worked for them in the 2014 Farm Bill, will work again this time, but MSU Extension educators warn choosing the same program as last farm bill could result in a vastly different outcome.
Farmers signing up for 2018 Farm Bill programs are probably missing out if they are signing up for the same programs they did in 2014. While the programs may have the same titles, they are handled slightly different than in previous years, which can have a big impact on a farm’s bottom line.
When the 2014 farm bill was signed, farms had profited from years of high prices and many felt confident that PLC wouldn’t pay for the first few years. In 2014, the price situation indicated that only one program option in Michigan was going to provide the highest payment revenue and that program was ARC County. That’s what most of the farmers went with and was the best choice in nearly all Michigan counties.
Today, circumstances are very different. For the 2018 Farm Bill, commodity prices the last 6 years have been much lower as compared to 2014. Some commodities are expected to fall below the reference price level for the 2019 and 2020 crop production years, a situation that wasn’t expected to happen at sign up time for the 2014 Farm Bill. Prices have greatly changed, which opens up the possibility of PLC being not only an option, but probably the best choice for wheat and maybe for corn depending on a farm’s specific FSA base acres and PLC yields. For soybeans, ARC County appears to be a good option in most counties and is possibly a good choice for corn. The 2019 actual county yields in relationship to previous 6-year yields are critical in making the ARC County vs. PLC decision.
Producers have the advantage of knowing their yields for the 2019 production year. Normally, the decisions are made going into the crop year with a greater amount of uncertainty. Because the 2018 Farm Bill programs took so long to be announced, producers have a lot of useful knowledge on both county and farm yields and what prices will be for the 2019 production year. This makes the decision for 2019 much more certain. Farmers didn’t have this kind of information when they made the 2014 Farm Bill decision. In the 2014 the one decision as to which program was chosen lasted for 5 years. With the 2018 Farm Bill, the first decision is for 2019 and 2020 combined but then 2021, 2022 and 2023 each stand alone. And the ARC County/ARC Individual/PLC choice can be changed each year after 2020.
Prevent Plant is another game changer for these decisions. Producers with FSA Farms who have 100% Prevent Plant will max out the ARC-IC program. This is a program that was not popular in 2014, but now in 2019 it’s a big deal, because a zero yield and maximum payment will be assigned for the 2019 ARC Individual payment calculation. There’s also the potential that FSA farms with low yields should also consider ARC Individual, as that program choice could provide higher total farm payments.
Several business-savvy farmers have reported they did not realize all the significant differences between the 2014 and 2018 Farm Bill programs and were planning to just go with what they chose last time until they had attended a 2018 Farm Bill Meeting or talked with MSU Extension educator. To avoid this, MSU Extension encourages that all farmers, regardless of farm size, attend one of the remaining 2018 Farm Bill meetings. Farms that have Prevent Plant acreage are highly encouraged to attend these meetings so that they fully understand how the 2018 Farm Bill programs will affect their farms.
MSU Extension has partnered with local FSA offices to offer multiple Farm Bill Meetings across Michigan during January 2020.
At these meetings producers will:
- Hear highlights of the 2018 Farm Bill and assessments of today’s market compared to five years ago.
- Learn about the process of updating their yields with FSA.
- Work through case examples using the MSU Extension 2018 Farm Bill Calculator to help make better decisions on ARC versus PLC (Each crop and FSA farm number may result in a different choice.).
- Discuss specific program details with local FSA staff.
Speakers include both MSU specialists/educators as well as your local FSA staff. For a complete listing of locations, dates and times, please visit our MSU Events page at https://events.anr.msu.edu/farmbill/.
Additionally, farmers attending the 2020 Great Lakes Crop Summit in late January can visit the ARC and PLC assistance help room staffed by MSU Extension farm management educators. The help room will be open during the 2020 Great Lakes Crop Summit at the Soaring Eagle Casino and Resort in Mt. Pleasant, Michigan, from 12 – 6 p.m. on Jan. 29 and 9 – 11 a.m. on Jan. 30. Please bring base acres and PLC yield information for each farm number, which can be requested from your local Farm Service Agency office. You will also need actual crop yields for 2013 to 2017 for each farm number. This can be collected from crop insurance or farm records.
This article was published by Michigan State University Extension. For more information, visit https://extension.msu.edu.