Economic Tidbits

Farm Program Deadline is March 15

Producers were given the opportunity under the 2018 Farm Bill to make enrollment decisions annually for farm programs. Producers can choose either the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs for each program commodity—in Nebraska primarily corn, grain sorghum, wheat, and soybeans. Enrollment decisions on 2022 crops must be made by March 15. Any payments coming from decisions this spring won’t be made until October 2023.  

UNL agricultural economist Brad Lubben analyzed program choices facing this year in an recent article in Nebraska Farmer at: https://urlisolation.com/browser?url=https%3A%2F%2Fwww.farmprogress.com%2Ffarm-policy%2Fsafety-net-programs-decisions-. Lubben notes current market prices are much higher than the protections provided in either the ARC or PLC programs. Marketing year average prices would have to fall significantly or yields would have to be disastrous to trigger payments. For example, the PLC reference price for corn is $3.70. Lubben comments, “with current price expectations above $5, there is a very small probability of PLC triggering a payment . . .” Also, the benchmark or protection afforded under the ARC program is based on olympic price average from 2016-2020. Because the average price for corn in most of those years was below the reference price of $3.70, the benchmark price remains at $3.70. Again, the risk protection appears to be minimal. The analysis for soybeans, wheat, and sorghum are similar.

Program decisions from last year will automatically roll over to 2022 if a producer does not enroll by March 15. While the probability of payments remain small, producers should examine program options in conjunction with crop insurance and marketing plans to be sure their enrollments are the best for their operations.

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