On December 21, 2024, the U.S. Congress enacted and President Biden signed the American Relief Act of 2025, extending the 2018 Farm Bill into 2025. This extension means farmers will once again choose between Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) for commodity support. The decision deadline has been extended to April 15, providing farmers with an additional month to evaluate their options.
The revised farmdoc 2025 Farm Bill What-If Tool offers valuable insights for these critical decisions. Generally, ARC at the county level (ARC-CO) appears to be the most advantageous option for corn, soybean, and wheat base acres, offering higher payments in most scenarios. However, PLC becomes more favorable at very low prices, especially for corn and wheat. Understanding these nuances is essential for maximizing support under the new legislation.
Farmers must decide on a program for each Farm Service Agency (FSA) unit, allowing flexibility to mix and match PLC and ARC-CO based on specific commodities. The effective reference prices for 2025 have been set using a unique formula that considers the statutory reference price or 85% of the Olympic average of prices from 2019 to 2023. For instance, corn's effective reference price is $4.26 per bushel, while soybeans' is $9.66 and wheat's is $5.56. These prices are crucial for determining potential payments under both PLC and ARC programs.
The ARC benchmark prices for 2025 are notably higher than previous years due to recent marketing year averages and the use of effective reference prices as minimums. For corn, the benchmark price is $5.03; for soybeans, it's $12.17; and for wheat, it's $6.72. At 86% of these benchmarks, ARC-CO guarantees payments when actual revenue falls short, making it generally more beneficial than PLC across various yield and price combinations. However, PLC remains a safer choice at extremely low market prices.
This extension provides farmers with enhanced flexibility and potentially higher support payments. While ARC-CO seems to offer better prospects in most cases, PLC can still be the optimal choice under certain conditions, particularly for managing risk at very low prices. Delaying the decision deadline until April 15 allows producers to gather more information, aiding in making informed choices that best suit their operations. The updated tools and resources available ensure farmers can navigate these complex decisions with confidence, ultimately supporting agricultural resilience and stability.