Robin Reid

Selecting between federal crop protection programs may be “a more difficult decision” this year for growers than in the past, a Kansas State University economist says.

The Price Loss Coverage program provides better price protection, but a farmer is more likely to receive an Agricultural Risk Coverage payment, especially for dryland crops, said Robin Reid, KSU Extension farm economist, during a webinar Feb. 2. She’s based in Manhattan, Kan.

PLC triggers when the price falls below the reference price for the crop. For wheat, it’s $5.50 per bushel.

The ARC County (ARC-CO) program triggers when revenue is below 86% of the county benchmark, which is set by the previous five years — with one lag year — of national marketing year average prices and county yields.

Payments are determined on a county-by-county basis.

ARC payments hit the maximum pretty quickly, Reid cautioned.

During the 2014 Farm Bill, with “really low” corn, wheat and sorghum prices, farmers received good PLC payments to help with low commodity prices. Those farmers in the ARC county program also received payments, but not as much, because the payment stopped at 10% of the benchmark revenue, Reid said.

”In a low price environment, PLC really offers the best risk management,” she said.

Growers have until March 15 to decide which program to select. They would likely receive a payment in October 2025, after the end of the marketing year.

Reid didn’t expect any PLC payments this year from the previous year’s crop. She expects some ARC-CO payments in Kansas this fall due to drought and yield challenges.

Soft white wheat prices ranged from $6.40 to $6.55 per bushel on the Portland market.

Extended farm billGrowers have one more year to choose between the two programs as they’re currently structured, because the 2018 Farm Bill was extended until Sept. 30.

”I’m sure the question at hand is, ‘Will we have a new farm bill?’” Reid said. “It is very tough to pass a farm bill in an election year … just the reality of the political environment right now, there’s a lot of work to do yet before a new farm bill would be rolled out.”

Another extension is a possibility, she said.

Crop insurance and the Supplemental Nutrition Assistance Program, or SNAP, are permanently authorized, even if there’s a lapse in the bill.

“Most of what we’re hearing is kind of a ‘status quo’ farm bill, meaning just some small tweaks to what we have now, but nothing revolutionary,” Reid said.

Farmers hope to raise PLC reference prices in the new bill. Reference prices increased for corn, soybeans and sorghum in 2024 due to certain historical price conditions being met, but wheat remained at $5.50 per bushel.

“Unfortunately, in wheat that run-up in prices has been a little more short-lived since the conflict in Ukraine, and the historical prices are just not kicking that formula up yet,” Reid said. “I would anticipate next year we might be able to see that $5.50 (reference price) increase.”

Cost of the farm bill {/span}The 10-year baseline cost for the 2018 farm bill was $867 billion. The latest 10-year baseline in 2023 was $1.46 trillion.{/span}

”So the farm bill has gotten considerably more expensive,” Reid said.{/span}

About 84% of the next farm bill is nutrition spending, a “significant increase,” she noted.{/span}

”A lot of this is due to just food being more expensive these days,” she said.{/span}

Reid concluded by saying she hopes the crop year goes so well that farmers don’t need a payment.{/span}

”That means prices didn’t fall, county yields were good,” she said. “That is really the best way we come out of selecting these programs.”{/span}

Watch the KSU Extension webinar

https://www.youtube.com/watch?v=XQ_Om9DLIIE