|
| I'd be glad to respond to questions on ARC/PLC Election/Enrollment as well as Crop Insurance Decisions. I've taught and written on the topics over the past 20 years while serving as an Extension Farm Management Specialist at Iowa State University. Steve Johnson
There are a couple interactions of the ARC/PLC program and crop insurance. Most immediate is the March 15th deadline for both. Also, PLC election/enrollment is required for that crop for that FSA farm # in order to purchase Supplemental Coverage Option (SCO). ARC/PLC is not a very good price or revenue risk management tool as you're using historical base acres and historical PLC yields. If triggered you're only paid on 85% of your base acres and not until Oct. '22 for the '21 crop. I feel that most all soybean base acres will be enrolled for '21 in the ARC-County (ARC-CO) program.
Start by understanding how PLC payments are triggered and whether to eliminate PLC for that crop in '21. The PLC Effective Reference Price is $8.40/bu for soybeans and I doubt the national average cash price for the '21-'22 marketing year will ever be that low. It hasn't been triggered over the past 7 years! Many corn base acres will move to ARC-CO, as the PLC Effective Reference Price is $3.70/bu. Possibly the same for wheat base acres with an Effective Reference Price of $5.50/bu. It's possible the cash price national average cash prices could drop that low for both crops, but I doubt it. Unless you're farming in a county with really low '21 final county yields (triggering ARC-CO), I doubt either ARC-CO or PLC payments will be triggered as the national avg. cash prices remain high and limit both program payment triggers. It's the interaction of PLC with SCO that will keep many corn and perhaps spring wheat acres in PLC. Failure to notify FSA and update your ARC/PLC election by March 15, means you can only enroll in the program for that crop on that farm that you elected for the '19 and '20 crops. Nationwide, that election was 75.5% PLC for corn base acres, 79.7% ARC-CO for soybean base acres and 93% PLC for wheat base acres. You're only making a a one-year election/enrollment ('21 crop) and will be allowed next year to make a '22 crop election/enrollment.
The new Enhanced Coverage Option (ECO) can be purchased regardless of ARC/PLC decisions. Both SCO and ECO products are county-based endorsement coverage for a portion of the insured’s underlying crop insurance policy deductibles. These are shallow loss products, so you're covering upper end losses and yes, premiums will reflect this. These endorsements are tied to the underlying multi-peril product (typically Revenue Protection or Yield Protection) an insured producer purchases annually, and indemnities are calculated using county-level yields.
I'd suggest your multi-peril product (likely Revenue Protection) and related unit structure, level of coverage and supplemental policies (hail, wind/green snap, etc.) are your more important crop risk management tools. You can then have confidence to "pre-harvest market" your crop insurance delivery bushels. Work now with your crop insurance agent as they will be really busy in March once premiums and revenue guarantees are known.
Here's a link to a new ISU Extension publication on SCO/ECO that I co-authored:
https://www.extension.iastate.edu/agdm/crops/html/a1-44.html
I'll present free webinars (one-hour plus questions) on Tuesday, Feb. 16th. These are sponsored by Rain and Hail and titled "Crop Marketing & Crop Insurance Strategies."
Please pre-register in advance: https://www.rainhail.com/d/ps/eform/submit/grower-meetings | |
|
ARC/PLC and Crop Insurance
