FAPRI Analysis Looks at ARC vs. PLC

The U.S. Department of Agriculture's recent release of a January 2015 deadline to sign-up for farm bill programs gives farmers some more time to make decisions. Before sign-ups begin - land-grant economists - including University of Missouri's Pat Westhoff - are crunching the numbers and running future commodity price scenarios to help farmers make these important decisions. Westhoff recently presented MU's Food and Agricultural Policy Research Institute analysis of the Agricultural Risk Coverage and Price Loss Coverage programs - which was based on January market conditions and FAPRI's average price projections released in March. Price projections favor four-dollar corn for the next five-years and suggest the PLC program will hold little short-term attraction for corn farmers. ARC payments will likely be triggered in the next two-years for corn - but Westhoff says growers should keep in mind ARC's benchmark revenue level is not rigid. As prices in projections fall - the benchmark eventually adjusts downward - he says. FAPRI's calculations show average PLC payments could overtake average ARC payments for corn farmers as early as the 2016-2017 crop season. As for soybeans - analysis favors ARC slightly more with average PLC payments not overtaking average ARC payments until the 2018-2019 crop season.

As for rice - FAPRI analysis shows average PLC payments would be about six-times larger than average ARC payments each year. For wheat - the analysis - driven by wheat prices falling under six-dollars in 2015 - shows average PLC payments would overtake average ARC payments in 2015 with the gap widening over the next four-years.

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