US Crop Farmers Miss Out on Potential Payments Due to Suboptimal Commodity Program Choices
Crop farmers in the US have to choose between the ARC-CO and PLC commodity programs for each crop year, but their decisions often fall short of maximizing payments. According to a recent analysis by farmdoc daily, the average farmer captured only about 67% of potential ARC-CO and PLC payments during the 2021-2024 crop years.
A decision guide was developed to help farmers make better choices, which assumes that the current crop marketing year's January price is a good predictor of the upcoming crop marketing year's average price. The guide suggests choosing PLC if the program crop's average US cash price for January of the current crop marketing year is less than the crop's effective reference price for the upcoming crop marketing year.
A 'what if' analysis using this decision guide found that it would have captured around 93% of potential ARC-CO and PLC payments, compared to the actual 67%. The guide was applied to a diverse set of crops, including barley, corn, oats, peanuts, rice-Japonica, rice-long grain, sorghum, soybeans, and wheat.