Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) are both USDA commodity programs but with differing goals. They’re often confused with crop insurance, so it’s important to note these programs are administered by the government, not RMA. Let’s take a closer look at each.
PLC is a low national price assistance program where a reference price is set by Congress to protect farmers from the financial consequences of a downturned market. Assistance is provided through cash payments to impacted farmers based on the difference between market year price and the reference price.
Meanwhile, ARC provides assistance when a period of low income replaces a period of higher farm income. Transition assistance first began in 2008 at the beginning of the prosperous 2007 – 2013 period. The goal of ARC is to provide assistance early to dampen potential consequences of a return to an economic downturn. Assistance is based on the Olympic average of observed yields and the five-year market price average. ARC assistance gives farmers a longer adjustment period to lower income.
As we progress into a new farm bill discussion, a new program design that reflects the different objectives of ARC and PLC into one new program may be the best for everyone. That proposed commodity program design would eliminate the need for farmers to decide between the two, reducing resource time on both farmers and Farm Service Agency staff.
To view a breakdown of crop insurance products available in your state, visit our handy page.
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