Growers are more likely to hit the statutory limit on crop subsidies if they choose the Price Loss Coverage option rather than the Agriculture Risk Coverage option, say economists Jonathan Coppess, Gary Schnittkey and Nick Paulson of U-Illinois. The limit is $125,000 per person, doubled for a spouse. Writing at farmdoc daily, the economists advise careful consideration of risk management options before selection PLC, which operates like a traditional target-price subsidy, and ARC, which is a shield against shallow crop revenue losses.
At present, PLC would pay more per acre in the farm program than would ARC, say Coppess, Schnittkey and Paulson, who compare potential payment rates with the number of acres needed to reach $125,000. It would take less than 600 acres to hit the payment limit at projected PLC payments on corn but 2,200 acres for the likely ARC pay-out, based on current conditions. “Thus, payment limits likely become more of a consideration if PLC is elected,” they say in a summary.