Glossary

ARC vs. PLC, Explained

ARC and PLC are the two USDA farm-program safety nets you elect at FSA. One pays on revenue shortfalls, the other on low prices. Here's the difference in plain language, and how to think about the choice.

Preston Schrader2 min read
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What ARC and PLC are

ARC (Agriculture Risk Coverage) and PLC (Price Loss Coverage) are the two main commodity safety-net programs administered by USDA's Farm Service Agency. For each covered commodity on a farm's base acres, you elect one program or the other (election rules and windows are set by the current farm bill).

Two things trip people up right away:

  1. Payments run on base acres and program yields — not what you planted. These are historical numbers attached to the FSA farm record, so the program is a safety net on the farm's history, not this year's crop.
  2. It's a per-crop, per-farm choice. Corn can be ARC on one farm and PLC on another.

PLC: a price floor

PLC pays when the marketing-year average price for the commodity falls below its effective reference price. The payment covers (roughly) the gap between the two, times the farm's program yield, times a percentage of base acres.

Think of PLC as pure price protection: a big national crop that crushes price triggers it, even if your own yields were fine.

ARC: a revenue floor

ARC-County (the common choice) pays when actual county revenue (county yield × marketing-year price) falls below a percentage of the county's benchmark revenue (a multi-year Olympic average of county yields × prices). Payments are capped at a band below the benchmark.

Think of ARC as shallow-loss revenue protection: it responds to the combination of county yield and price, but the benchmark drifts with recent history, so several good years raise the bar and several bad ones lower it.

How to think about the choice

  • Expect multi-year low prices below reference levels → PLC tends to protect better.
  • Worried about county-wide revenue dips in otherwise decent price environments → ARC tends to respond sooner.
  • The interaction with crop insurance matters (e.g., PLC election is what makes the SCO endorsement available in years it's offered).

Reference prices, escalators, payment caps, and election windows are farm-bill specific and change. Treat this as the concept map, and run current numbers with FSA or your extension economist before electing.

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