Don’t Be in A Hurry on ARC/PLC decision
Farmers have until March 15, 2020 to sign up for ARC or PLC for the 2019 crop. It appears that most farmers are leaning toward PLC for the 2019/2020 crops (remember the 2019 sign up locks you in for 2020 too).
However, with the large variability in crops due to weather this year, it will likely pay for you to wait until harvest is done and you have some certainly on yields in your area. Plus, the final payments for the 2018 crops will be coming next month (for most crops) and we will have hard data on the final 2018 yields.
This will allow us to plug in estimated 2019 yields and see how it will affect ARC payments for both 2019 and 2020. If yields this year are lets say 10-15% below normal for your county, locking in ARC may make more sense than PLC. This is especially true if we get a rally in corn and bean prices due to lower final yields.
We will keep you posted with some additional calculations once the final 2018 yields are released in October.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
I raise wheat in Walla Walla county. Our 2019 harvest ended over a month ago and it looks like the yield was a little above average. I suspect that the PLC will be a better bet for 2019 but since we are locking in 2020 as well it is hard to know just what 2020 will be like. Any thoughts?