Producers have until April 15, 2025, to make their farm program selections for crops to be harvested in 2025. Both Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) are offering higher price benchmarks this year, as historical prices setting these guarantees have been higher.
|
Corn |
Grain Sorghum |
Soybeans |
Wheat |
|
|
PLC 2025 Reference Price |
$4.26 |
$4.51 |
$9.66 |
$5.56 |
|
ARC 2025 Benchmark Price |
$5.03 |
$5.30 |
$12.17 |
$6.72 |
|
86% of ARC Benchmark |
$4.33 |
$4.56 |
$10.47 |
$5.78 |
PLC will make payments if the national Marketing Year Price (MYA) falls below these reference prices. Producers will receive a payment calculated as the difference between the reference price and the MYA, times their individual farm’s established program yield with FSA, then paid on 85% of their base acres in that commodity. This program will pay on losses in price unless the MYA gets below loans rates established in the 2018 Farm Bill, which means large payments will occur if commodity prices are low.
ARC is a revenue program, which takes the benchmark price in the table above and multiplies it by the county’s benchmark yield to establish a benchmark revenue for each crop. If the current year’s revenue (national MYA price multiplied by the 2025 county yield) is less than 86% of this amount, there will be an ARC payment. That is why “86% of ARC Benchmark” is also included in the table, as these would be the MYA prices that would trigger an ARC payment if the county had an average yield. The advantage of this program is that it has both a yield and price component, which has produced ARC payments in recent years due to drought, even at high prices. The disadvantage is that the payment is capped at 10% of benchmark revenue, which tends to happen quite quickly if a payment is triggered. Like PLC, it also pays on 85% of the farm’s base acres in each crop.
Remember the payments for the 2025 crop year will NOT be paid until October of 2026 once the 2025 county yields are determined and Marketing Year Average price is known, so a lot could happen to market prices between now and then. While ARC may be more likely to pay unless there is a bumper crop yield in the county, overall protection against low prices is less than PLC because of the 10% cap on payments. A great tool for assessing potential ARC-CO versus PLC payments at various MYA price levels and county yields is the ARC/PLC Tradeoff spreadsheet found here: https://agmanager.info/ag-policy/2018-farm-bill/tradeoff-between-20252026-arc-and-plc
Another factor in the decision to choose ARC or PLC for each crop is if a producer wants to elect the Supplemental Coverage Option (SCO) on their individual crop insurance. If so, base acres in that commodity cannot be enrolled in ARC. For many counties, their benchmark yield for ARC is much higher or lower than their expected yield (provided by RMA). A much higher benchmark means ARC will trigger easily, a lower benchmark yield means that this is less likely. A new tool that also analyzes SCO in relation to ARC and PLC can be found here: https://agmanager.info/crop-insurance/crop-insurance-papers-and-information/advanced-arc-plc-sco-tradeoff-tool
The K-State Department of Agricultural Economics recently had a webinar on these topics, with more in-depth information and analysis. The recording is available here: https://agmanager.info/events/2025-winter-wednesday-webinars
Robin Reid, Extension Farm Economist
robinreid@ksu.edu
Jenny Ifft, Ag Policy Extension Specialist
jifft@ksu.edu
Tags: risk coverage