Farmers' $1.3B Safety Net Gap Could Be Closed with Simple Decision Guide

Farmers in the United States are about to make a crucial decision for the 2026 crop year, choosing between Price Loss Coverage (PLC) and Agricultural Risk Coverage-County (ARC-CO) programs. Recent analysis from Farmdoc suggests that using a simple decision guide could help producers capture up to $1.3 billion more in potential payments than they have in the past.

The decision involves selecting between PLC and ARC-CO for base acres of barley, corn, oats, peanuts, rice, sorghum, soybeans, and wheat. Historical data shows that farmers' choices recently resulted in $3.2 billion in total payments, but this was $1.6 billion or 33% below the amount that would have been received if every acre had been enrolled in the higher-paying program.

The decision guide instructs farmers to choose PLC only if the U.S. average cash price for the program crop in January is lower than the effective reference price for the upcoming marketing year. If the January cash price is higher, the analysis suggests electing ARC-CO to maximize potential returns. This approach assumes that today's price is the best available predictor of future market trends, absent unpredictable shocks that may occur during the growing season.

A comprehensive analysis of nine major commodities found that this guide correctly identified the highest-paying program in 89% of cases during the study period. For the three largest U.S. crops, corn, soybeans, and wheat, the guide's accuracy reached 92%, demonstrating its utility across diverse agro-production systems and market characteristics.