By Carl Zulauf and Nick Paulson et.al
Since 2019, ARC-CO (Agriculture Risk Coverage – county version) and PLC (Price Loss Coverage) payments have approximately followed market returns: large when market losses are large and small when markets are profitable (see Figure 1). But these payments, which (based on statutes) are made starting in October of the next crop year, have not been timely. They bear no relationship with market returns at the time of payment (see Figure 2). To provide specific illustrations of this disconnect, 2019 crop year payments covered 48% of 2019 harvest losses ($6.2 vs. -$13.2 billion) and 2020 crop year payments covered 53% of 2020 harvest losses ($2.2 vs. -$4.2 billion). However, 2019 crop year payments arrived at the 2020 harvest, overcompensating for 2020 harvest losses ($6.2 vs -$4.2 billion); while 2020 crop year payments arrived at the 2021 harvest, adding $2.2 billion to $30.4 billion in market profits. For farmers and their lenders, the timing of payments is important. Paying at harvest would notably improve commodity program relevance for managing a farm.
Figures 1 and 2 use market net return at harvest reported by USDA (US Department of Agriculture), Economic Research Service and ARC-CO and PLC payments reported by USDA, Farm Service Agency and University of Illinois at Champaign-Urbana (farmdoc daily, November 11, 2025, and May 14, 2026). Net returns and payments are combined for the nine crops for which USDA computes an economic cost of production (COP): barley, corn, cotton, oats, peanuts, rice, sorghum, soybeans, wheat. The net return data are discussed in detail in farmdoc daily, February 5, 2026.
Proposed Harvest Price Loss (HPL) Design (replacement for PLC)
HPL is a harvest price loss design at the US level. Payment occurs if crop insurance harvest price is less than benchmark price. Benchmark price can be fixed by Congress or be a function of the average of recent insurance harvest prices. Payment is made during the month following peak harvest on a crop’s base acres.
Proposed Harvest Revenue Loss (HRL) Design (replacement for ARC-CO)
HRL is a harvest revenue loss design at the US level (see Data Note). Payment occurs if harvest revenue per acre is less than benchmark revenue per acre. Harvest revenue is calculated as the US yield estimate made by USDA, National Agricultural Statistics Service during the month when most of the crop is harvested times the crop insurance harvest price. Benchmark revenue is a function of the average of recent harvest revenues. Payment is made during the month following peak harvest on a crop’s base acres.
Source : illinois.edu