One-time Election Needed for Farm Bill Programs

Wheat growers are going to have to decide between Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) and there are multiple things to consider when deciding. CliftonLarsonAllen Partner and Farm CPA Today Blogger Paul Neiffer has done extensive analysis on both programs and says first and foremost — each farmer will need to determine what is best for his own operation — however Neiffer says based on reviewing the programs

Neiffer: “ARC makes no payments until the price drops until $5.50 approximately. While the PLC kicks in at $5.50. So I think on wheat, I think most farmers are probably going to lean towards PLC for that reason. Because if wheat prices rally over the next few years — there probably isn’t going t be a payment because the prices rallied. You’ve got to remember ARC only kicks in if the price is 86 percent of the target price. Now if you have a bad yield, it could kick in. But the interesting thing is, that PLC kicks in at $5.50 and ARC only kicks in at $5.50 and PLC has no limit on the amount you can be paid per acre. While on ARC there is a limit — its 10 percent of your target revenue.”

If you are interested in reading Nieffer’s analysis using the average five-year market prices, go to Farm CPA Today.com.