URBANA, Ill. – With the election and enrollment period for the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs for the 2021 crop year now open, decisions must be made by farmers before March 15th, 2021, as to which coverage option they prefer. Among the changes to coverage options for next year’s crop is the ability to declare your coverage preference on an annual – rather than two-year – basis. Under terms of the 2018 Farm Bill, the programs were launched exclusively as two-year policies, but now producers can switch from year to year.

In addition, a new crop insurance program, the Enhanced Coverage Option (ECO), will also be available for crops produced throughout the Midwest. A county-based program, ECO is similar to the Supplemental Coverage Option (SCO) that can be used to supplement underlying multi-peril coverage for eligible crops.

Choosing a 2021 FSA commodity program was the topic of a Dec. 8 University of Illinois College of Agricultural, Consumer and Environmental Sciences webinar held as part of their 2020 Illinois Farm Economics Summit. The virtual conference was hosted by Todd Gleason, of WILL-AG, along with farm economists Nick Paulson and Gary W. Schnitkey.

Paulson began with a projection of ARC-County (CO) and PLC payments for both 2020 and 2021 corn crops. For this year’s crop, assuming a base price of around $3.95 per bushel for corn, county yield losses would likely be required to trigger ARC-CO payments for most Illinois farmers, and no PLC support would likely be forthcoming. “The expectation at this point is that there will be no ARC-CO or PLC support for corn in 2020, though prices could change,” Paulson said. “We will likely not know for sure until around August of 2021.”

As for potential commodity program payments on next year’s crop, using USDA’s November baseline price of $3.65 per bushel for corn, a small PLC payment could be expected but county yield losses would need to occur to trigger ARC-CO payments, the U of I economists believe.

“Assuming we have normal growing conditions and trend yield levels in 2021, the best forecast we have at this point comes from USDA’s long term baseline projection of $3.65 for corn. The market has moved us since those projections were put together, so you could view that as being the low end of what we could be looking at. At trend yields, you could expect no ARC-CO payments for corn in 2021. But then again, a lot could change between now and the 2021 marketing year,” Paulson said, before turning his focus to soybeans.

“For 2020 soybeans, on the price side we are looking at USDA’s ERS futures-based forecast of $10.68 (per bushel). At that price level obviously there would be no PLC payments triggered and we would need to see a $2 move down from that expectation before PLC would be triggered,” he said. “And we would need to see some pretty significant county yield losses if prices came in at that range in order to trigger ARC-County.”

Paulson admitted producers face a “tough decision” with selecting a coverage program, with neither program likely to trigger support. “I think there is rationale for either choice, but we have until March to make a choice. Things can change over that period of time,” he said.

With USDA’s baseline price projection for 2021 marketing year soybeans currently at $10 per bushel, there will also likely be no ARC-CO or PLC support for soybeans. Again, large downward pressure on prices and-or below county county trend line yields would be required to trigger payments at that price level, according to the economists.

Selecting a 2021 program for wheat was also addressed by Paulson: “For 2020 at the benchmark yield level in Champaign County of 78 bushels we would be looking at a small ARC-CO payment, and over $40 in PLC. To get that ARC-CO amount larger, we would need to come in about 10 bushels under that benchmark yield amount, assuming USDA’s market year projection of $4.70 per bushel,” he said.

“USDA’s 2021 marketing year projection for wheat is still below that $5 level, and at that price level we would be looking at pretty sizable PLC payments again. At benchmark yield, ARC-CO would not trigger support for 2021.”

Another FSA option, ARC-IC, is an individual farm option that was very popular in 2019, when many producers were forced to exercise their prevented planting option. The lower payment rate associated with the program is a good reason to stay away from it during a “normal” growing season, according to Paulson and Schnitkey.

“Those who chose ARC-IC in 2019 should be receiving their payments in the mail in the next couple of weeks,” Schnitkey added. He also reminded farmers that they must sign up for either ARC or PLC programs for corn, soybeans and wheat at local FSA offices before March 15, 2021, for 2021 marketing year coverage.

A live poll of webinar attendees revealed that 21 percent were highly considering the ARC-CO option for corn in the 2021 marketing year, while 22 percent leaned toward PLC. Most respondents were uncommitted. For soybeans, 27 percent were considering ARC-CO coverage, 8 percent preferred PLC and 61 percent were uncertain.

Another poll showed that 67 percent of respondents expect no CFAP or MFP payments to be forthcoming in 2021. Twenty-five percent said they think payments equaling less than $20 per acre will be made, while 8 percent expect payments of $20 to $40 per acre.