For dairy farmers, risk planning goes beyond the Dairy Margin Coverage program, Dairy Revenue Protection, and the many tools in the futures market. For those dairy farmers with eligible base crop acres, it’s time to make their 2022 enrollment decisions for ARC and PLC. Those are the other farm programs that many dairy farmers use.

Signup for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) for the 2022 crop year runs until March 15, 2022. Farmers choose ARC or PLC for each crop for each Farm Service Agency (FSA) eligible farm that they operate. This year I recommend signing up for county ARC for all major crops: corn, soybeans, wheat, and oats. However, if you want to buy Supplemental Coverage Option (SCO) crop insurance on top of your usual crop insurance policy, then you must choose PLC.

Expected prices for 2022 are well above PLC reference prices for each crop on a bushel basis:

• $3.70 for corn

• $8.40 for soybeans

• $5.50 for wheat

• $2.40 for oats

PLC makes payments if the national marketing year average price falls below the reference price, while ARC makes payments if county revenue falls below the county guarantee. With current price expectations, neither program is likely to make payments for 2022.

If you want to cover more of your expected revenue, this may be a year to look at two relatively new crop insurance options: Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO), both of which are layered with your individual policy.

For example, if you have Dairy Revenue Protection with a 75% coverage level, SCO provides coverage from 75% to 86% of your expected revenue using a county policy. On the flip side, ECO uses a county policy to provide coverage from 86% to 95% of your expected revenue. If you want to buy SCO, you must choose PLC, not ARC.

Contact your local county FSA office to make your ARC/PLC election; you can change your election until March 15, 2022. Contact your crop insurance agent if you want to know more about SCO and ECO.

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(c) Hoard's Dairyman Intel 2021
December 6, 2021
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