USDA Announces 2020 Price Loss Coverage (PLC) Payment Rates for Peanuts

by Scott Stiles, Instructor of Agricultural Economics and Agribusiness - October 1, 2021

In a news release Thursday, USDA’s Farm Service Agency announced a 2020 Price Loss Coverage (PLC) payment rate for peanuts of 5.75 cents per pound.

As background, the PLC and Agricultural Risk Coverage (ARC) programs were first authorized under the 2014 farm bill. The 2018 farm bill (Agricultural Improvement Act of 2018) extended both programs with some modifications.  Producers can now choose annually (for 2021, 2022, and 2023 crop years) between PLC and ARC based on their preference for protection against a decline in either (a) crop prices or (b) crop revenue, respectively. 

PLC and ARC-CO choices vary across “covered” commodities.  For the 2020 crop year, Arkansas producers enrolled 6,251 peanut base acres in PLC, ARC county (ARC-CO), or individual farm (ARC-IC).  Approximately 94% of peanut base acres (5,899) were enrolled in the PLC program option.

PLC price protection is based on a fixed reference price. PLC makes a payment when the Marketing Year Average Price is less than the reference price (see table). The PLC payment rate equals the difference between the PLC reference price and the higher of the Marketing Year Average Price or the National Loan Rate. 

The PLC payment rate is multiplied by a farm’s payment yield and 85% of base acres signed up for the respective commodity. ARC and PLC payments have a cumulative limit of $125,000 per person for all covered commodities, with the exception of peanuts, which has its own $125,000 limit.

All 2020 ARC and PLC payments cannot be made until the later of either of the following: 
• October 1, 2021 
• the announcement of the final 2020 Marketing Year Average price for the applicable covered commodity. 

ARC and PLC data, including ARC-CO yields and projected and final PLC payment rates is available on FSA’s website at http://www.fsa.usda.gov/arc-plc.