Participation, Payouts in Two USDA Risk Management Programs Vary Widely Based on Market Outcomes

Turner, Dylan

Participation, Payouts in Two USDA Risk Management Programs Vary Widely Based on Market Outcomes

Turner, Dylan

The 2014 Farm Bill introduced several commodity support programs, including the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. PLC compensates farmers when prices fall below established levels, and ARC provides income support to mitigate revenue risk. Payment calculations for ARC and PLC are based on commodity specific price thresholds, various measures of yields, and national average prices. The 2018 Farm Bill enabled farmers to choose one program or the other on a more frequent basis, causing the balance of participation between ARC and PLC programs to shift widely from year to year. As with program participation, payouts to farmers—which are tied to market outcomes—vary widely in any year.

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