URBANA, Ill. — Rather than continue to wait for Congress to pass a farm bill that retools the triggers for critical crop insurance payments, the University of Illinois farmdoc team has created a free tool to help farmers decide between ARC (Agricultural Risk Coverage) and PLC (Price Loss Coverage) insurance programs based on new reference prices for 2025 crops. 

Dr. Gary Schnitkey, U of I farm economist, explained how the updated “2025 Farm Bill What-If Tool” works, and why ARC-County may be the preferred choice for corn, soybeans and wheat this growing season. In a five-minute YouTube tutorial, Schnitkey also offered highlights from a recent farmdocDAILY.com article that offers insights about payment triggers and benchmark prices, along with a program comparison analysis to aid in optimizing farm program decisions in advance of the April 15 decision deadline.

“This year, the effective reference prices will be higher for corn, soybeans and wheat. For example, the effective reference price for corn will be $4.26 (per bushel), which will be higher than last year and also higher than the $3.70 statutory reference price. ARC benchmark price will also be higher at $5.03, and 86 percent of that ARC benchmark price is $4.33. 

“ARC-County will trigger at $4.33. That $4.33 is a bit higher than $4.26, and that indicates that ARC-County likely will have a higher chance of paying than PLC,” said Schnitkey, utilizing detailed examples from Champaign County, Illinois to draw his conclusions. 

Similarly, 86 percent of the soybean ARC benchmark price of $12.17 is $10.47, significantly higher than the effective soybean reference price of $9.66. “There is a large preference for ARC-County for soybeans,” the farm economist advised. 

The scales also tip in favor of ARC-County for wheat, according to the farmdoc tool. With the benchmark price for wheat set at $6.72, the ARC-County benchmark price of $5.78 eclipses the effective reference price of $5.56 for wheat.  

“For all three commodities, ARC-County likely has a higher chance of payments and larger payments than PLC,” Schnitkey advised, before adding a caveat to his findings: “If we have very low prices or market average year prices much below the effective reference price, PLC will pay more than ARC-County because it doesn’t have the 10 percent cap that ARC-County does. Overall, giving preference to ARC-County for corn, soybeans and wheat, with the caveat of those lower prices seems to make sense.”

The 2025 Farm Bill What-If Tool allows producers to utilize their specific county’s data to perform their own speculative analysis of ARC vs. PLC payouts, Schnitkey explained. “(The tool) will show from any county crop practice combination projected payments under different market year average prices and different yields,” he said.

The decision deadline for 2025 farm programs was moved back one month, from March 15 in previous years, to April 15. According to the farmdoc team, “while delaying the decision until closer to the deadline has some drawbacks, such as the potential to spill into and disrupt the early part of the spring planting season and putting a strain on Farm Service Agency staff, waiting will also provide producers with more potentially useful information. This is particularly true for wheat, as the 2025 marketing year is already underway and more information about wheat production in other major production regions of the world will be available.”

2025 PLC and ARC-CO Decisions:

Price Loss Coverage (PLC) is a crop-specific fixed price support program that triggers payments if the marketing year average (MYA) price falls below the commodity’s effective reference price. Payments are made on 85 percent of historical base acres. 

Agricultural Risk Coverage at the county level (ARC-CO) is a crop-specific county revenue program. ARC-CO triggers payments if actual revenue (MYA price times county yield) falls below 86% of the benchmark revenue (product of benchmark price and trend-adjusted historical benchmark yield for the county). Payments are made on 85% of historical base acres.

Agricultural Risk Coverage at the individual level (ARC-IC) is a farm-level revenue support program. Like ARC-CO, payments are triggered if actual revenue falls below 86% of the benchmark. If an FSA farm unit is enrolled in ARC-IC, information for all commodities planted in the current year is combined together in a weighted average to determine benchmark and actual revenues. If a farmer enrolls multiple FSA farms in the same state, all farm units are combined in determining the averages for actual and benchmark revenues. Payments are made on 65% of historical base acres.

Decisions are made for each FSA farm unit. PLC and ARC-CO are commodity-specific and can be mixed and matched on the same FSA farm or across different FSA farms; i.e., PLC for one commodity, ARC-CO for another on the same FSA farm or using different programs for the same crop on different FSA farms. (University of Illinois/farmdocDAILY)

The U of I’s 2025 Farm Bill What-If Tool can be located at www.farmdoc.illinois.edu.