Farm Bill FAQs: Price Loss Coverage Program

Farm Bill FAQs: Price Loss Coverage Program

Jan. 20, 2015

Over the past few months, the Nebraska Extension Farm Bill education team has been on the road talking with producers about the 2014 Farm Bill. This is one of a series of articles clarifying some of the common questions asked at these meetings. This article will address the Price Loss Coverage Program.

The Price Loss Coverage (PLC) program is a re-work of the Counter Cyclical Payment (CCP) Program. The PLC program protects farmers from prices falling below a set level, called a reference price. Payments for this program will be the difference between the reference price and the marketing-year average price or the loan rate, whichever is higher. Payments will be based on PLC yields and made on 85% of base acres.

Q: What is the deadline to enroll in a commodity program?
A: A commodity program must be elected by March 31, 2015. If no program is elected for a farm number, the farm will automatically be enrolled in the PLC program, but will not receive payments for the 2014 crop year. Once a program election is made, producers must also annually enroll in the program for payments to be earned. No deadline has yet been announced for the annual enrollment. Contact your FSA office to schedule your appointment.

Q: Who makes the decision to enroll in a commodity program? 
A: All current producers on the land make the choice to elect a farm number in the PLC program or the Agriculture Risk Coverage (ARC) Program. Current producers are defined as parties with an interest in the cropland on the farm the day the election decision is made. Farmland owners with a cash lease are not considered a current producer for program election. Crop-share landowners are considered current producers.

Q: What crops are eligible for commodity program payments? 
A:  The following commodities are considered "covered commodities": barley, canola, corn, crambe, flaxseed, large garbanzo, small garbanzo, grain sorghum, lentils, mustard seed, oats, peanuts, dry peas, rapeseed, long grain rice, medium grain rice, safflower, sesame seed, soybeans, sunflower seed, and wheat.

Q: How are PLC payments calculated? 
A:  The payment rates for this program will be the difference between the reference price and the marketing-year average price or the loan rate, whichever is higher. The payment rate is then multiplied by the number of base acres allocated to the respective crop, times the PLC yield, times 85%.

Q: What is an effective price? 
A: The effective price is the higher of the marketing year average price or the loan rate of a given commodity.

Q: If I am interested in enrolling in PLC, should I update my yields? 
A:  Yes, updating yields directly affects the PLC payment. If your updated yield is higher than your current CC yield, updating would result in a higher PLC payment.

Q: If I am interested in enrolling in PLC, should I reallocate my base acres? 
A:  When deciding whether to reallocate or maintain base acres, the landowner will need to compare both base-acre scenarios against each commodity program, county Agriculture Risk Coverage (ARC-CO), individual Agriculture Risk Coverage (ARC-IC) and PLC, for each farm number. Reallocating base acres may not benefit all farm numbers.

Q: How is the marketing year average price determined?
A:  The marketing year average price, sometimes abbreviated MYA, is the average of prices received over a crop's 12-month marketing year. The MYA is determined by monthly USDA NASS surveys of approximately 2,000 buyers nationwide, in 31 states, where 90% of sales occur. The marketing year for corn, grain sorghum, and soybeans runs from Sept. 1 through Aug. 31. The marketing year for wheat, oats, and barley runs from June 1 through May 31.

Q: I have multiple farms. If I enroll one farm number in PLC, do I have to enroll all farm numbers in PLC? 
A:  No. Different farm numbers can be enrolled in different farm programs.

Q: I have multiple covered commodities on one farm. If I enroll one covered commodity in PLC, do I have to enroll all covered commodities on that farm in PLC? 
A:  No. If a farm is not elected into the individual Agricultural Risk Coverage (ARC-IC) program, producers will be able to elect county Agricultural Risk Coverage (ARC-CO) or PLC on a commodity by commodity basis.

Q: Do I have to plant the covered commodity on the respective base acres in order to receive a PLC payment? 
A:  No. There is no requirement to plant covered commodities to be eligible for PLC payments.  Farms must only have base acreage for the applicable crop earning a PLC payment.

Q: If I enroll in PLC do I have to purchase Supplemental Coverage Option (SCO) Insurance? 
A:  No. Producers who elect PLC have the opportunity to purchase additional SCO coverage through crop insurance, but they are not required to.  Producers who elect ARC—either county or individual—will be ineligible to purchase SCO.

Q: If I enroll in a program now, can I change my mind at a later date?
A:  The election decision can be withdrawn and changed at any time during the election period.  This includes when "current producers" on the farm change during that period.

Q: I am a cash rent landlord who is changing tenants.  If the 2014 cash rent tenant makes a program election decision prior to the end of their lease, can the 2015 cash rent tenant change commodity programs once their lease begins?
A:  Yes, once the new tenant becomes the "current producer" on the lease, they may change the program elected for the farm as long the change is made by the election deadline of March 31, 2015.  The program election decision on file as of March 31, 2015 will apply to the 2014-2018 program years.

Jessica Johnson, Jim Jansen, and Monte Vandeveer
Nebraska Extension Educators

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