Farmers Have to Choose a New Risk Management Program

famer & laptopLet’s face it farming is not easy and manging risks amists Mother nature’s whims is even more risky. The only upside is that Congress is trying to help producers with new, innovative 21st Century risk management programs.

Farmer will have to make a choice between Risk Management Programs very soon. The US Department of Agriculture (USDA) recently unveiled new programs as part of the 2014 Farm Bill that will help farmers manage their risks: Agricultural Risk Coverage (ARC) & Price Loss Coverage (PLC). The choice producers make in the next few months will be irrevocable and used for the next five crop years.

Risk Management for Farms

These new Risk Management programs were developed to help protect producers during periods of low prices (PLC) and in the event of a really bad growing year (both yield and price) (ARC).  The two programs ARC & PLC use different basis to determine what loss payments may be and this gives farmers greater control over how their risk of loss is managed.

Agricultural Risk Coverage (ARC)

ARC is an innovative program that allows producers to base their risk management upon a rolling Olympic average (drop the high and low numbers) history of revenue using either their County average as a benchmark.  There is also an option for producers to use their own farm’s historic revenue. You actually have two choices with ARC:  ARC- COUNTY or ARC-INDIVIDUAL to further allow you to better customize your farm’s risk management needs.

Price Loss Coverage (PLC)

The PLC program will make payments to farmers if a covered commodity’s actual NATIONAL AVERAGE marketing year price is below an established reference (target) price in the Farm Bill. In other words, PLC only pays in situations of low national average prices versus ARC that uses both price and yield averages of closer geographic proximity in determining payments.

Farmers MUST make a decision on these programs or their farm will be defaulted into the PLC program.

Tools to Help You Decide

To help farmers choose between ARC and PLC, USDA helped create online tools that allow farmers to enter information about their respective operation(s) and see projections about what each program will mean for them under possible future scenarios. The new tools are now available at www.fsa.usda.gov/arc-plc.

Where to Look for More Info

Farmers and producers can find  out more information about ARC, PLC and these decisions at: http://www.arcforfarmers.com/



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