Price Loss Coverage (PLC)

By Jack B. Davis

Price Loss Coverage is one of the election choices available for producers under the 2014 Agricultural Act. The current producer1 on the farm has to make a one-time selection. Producers have the option to choose between three programs: Price Loss Coverage (PLC), Ag Risk Coverage-County (ARC-CO), or Ag Risk Coverage-Individual (ARC-IC)2.

Price protection offered by PLC is based on Reference Prices and Market Year Average (MYA)3 prices. The Reference Prices for the covered commodities are listed in Table 1, Column E. Reference Prices are set by statute for each of the covered commodities and are locked in for the duration of the farm bill. The monthly MYA prices are posted on the FSA’s ARC/PLC website (Table 1). Program payments will be made if the MYA price is below the Statutory Reference Price for the covered commodity. If there is a payment it will be based on 85% of the farms base acres for the covered commodity. Producers do not have to plant the crop to be qualified for PLC. Payments for PLC are calculated using the farm’s base acres and they do not require production reports from producers.

Table 1. Projected 2014 Price Loss (PLC) Coverage Payment Rate

Using information from Table 1. for corn, with a corn base of 100 acres, and a farm PLC yield of 142 bushels, the program payment would be: $603.50 = 100 acres X 85% X $.05/bu. X 142 bushels PLC Yield.

This is just one scenario of what could happen. Farm Service Agency (FSA) has several resources and tools available on their website to help producers compare different program options.

For additional information, visit the Farm Service Agency ARC/PLC Programs website.

The Supplemental Coverage Option is available for purchase by producers electing PLC. Starting in the 2015 crop year producers electing PLC may purchase the Supplemental Coverage Option. The Supplemental Coverage is available through your crop insurance agent, it is an endorsement to the individual plan of insurance. The supplemental plan provides ‘area-based’ coverage for losses above the underlying individual plan’s coverage level by extending coverage to 86%. Payments are issued if there is a qualifying area loss. The supplemental coverage must be purchased by the applicable sales closing date, for more information please contact your crop insurance agent.