ARC versus PLC decision required soon

As many readers of this blog are aware, there are looming deadlines for the ARC and PLC programs.  Landowners must decide whether to update their program payment yields and whether to reallocate their program base acreage by February 27, 2015.  Additionally, producers must decide between ARC and PLC coverage by March 31, 2015.

The latest issue of Cornhusker Economics discusses the above decisions from an economic standpoint that will likely be very helpful to Nebraska landowners and producers.  The article is well worth the read; below, I highlight some interesting bits of information but I cannot stress enough — read the entire article as it is worth your time.

First, yield updates.  Landowners can choose between keeping their current counter-cyclical payment yields or updating their payment yields based upon actual average yields per planted acre from 2008 to 2012.  Producers can choose between keeping their current payment yield or updating their payment yield on a crop-by-crop, farm-by-farm basis.

Next base acreage updates.  This is, as the article notes, an all-or-nothing decision.  The crux of the decision for landowners is, on a farm-by-farm basis, whether to keep current program base acreage or reallocating according to the average mix of planted and prevented-planted acres of program commodities from 2009 to 2012.

We then turn to the big decision: ARC versus PLC.  Note that it is the producer, not the landowner, who makes the ARC or PLC decision.  The decision is a one-time decision that is binding for the 2014 to 2018 crops years.  If no decision is made, the default is PLC coverage that cannot be changed at a later date.

The remainder of the article discusses the economic decision-making behind the choice of ARC and PLC.  The decision between ARC and PLC is dependent upon the program crops grown in your operation, projected prices for commodity crops, and your comfort with the possible outcomes.

Again, check out the article.  It provides a bevy of charts and graphs to explain the decision-making that producers and landowners must undertake if they wish to update yields and base acres, as well as the decision by producers between ARC and PLC.  And remember, the deadlines are looming so take the time to analyze the best path forward for you!

 

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