2025 Farm Program Decisions Are More Challenging

2025 Farm  Program  Decisions  Are  More  Challenging
April 15 is the deadline to sign-up for the 2025 farm program at local USDA Farm Service Agency (FSA) offices throughout the United States or online at on the USDA FSA website. Eligible producers are able to choose between the price-only “Price Loss Coverage” (PLC) and revenue-based “Ag Risk Coverage” (ARC) farm program choices. The ARC program choice includes both the county-yield based ARC-CO program choice and the ARC-IC program, which is based on farm-level yields. In recent years, corn and soybean producers have tended to lean toward ARC-CO over PLC for their farm program choice. Farmers may want to “push the pencil” or run the farm program calculators a bit more this year to determine their best farm program choice for 2025, especially for corn.
 
Following are some of the common questions that have been raised regarding 2025 farm program sign-up , along with some potential answers and considerations:

• Do I need to sign-up for the 2025 farm program if I do not intend to change my PLC or ARC-CO choice from 2025 ?

Based on FSA guidelines and requirements, farm units will automatically remain with the same farm program option as 2024 if no farm program choice is made for 2025. However, producers would still need to enroll in the 2025 farm program by April 15, 2025, to remain eligible for program benefits. Farm operators need to complete the proper FSA forms to finalize both steps in the farm program enrollment process. Producers can enroll in different farm program choices on separate farm units for the same crop, as well as for each crop.
 

• What are my considerations to make the best farm program choice for corn in 2025 ?

The odds of receiving either a corn 2025 PLC or ARC-CO payment for corn are improved due to higher benchmark (BM) and reference prices. The 2025 PLC reference price for corn is $4.26 per bushel, while the 2025 BM price is $5.03 per bushel. PLC payments begin at a final 2025 MYA price below $4.26 per bushel, while potential 2025 ARC-CO payments are dependent on the final 2025 county average yield and the final MYA price. At a 2025 MYA price of $5.03 per bushel, the county yield would need to be 15 percent or more below the BM yield to initiate an ARC-CO payment. For example, if the county BM yield is 200 bushels per acre, the final county yield needs to be 170 bushels per acre or lower to earn a 2025 ARC-CO payment.
 
Another way to look at ARC-CO payments would be if the final 2025 county yield is the same as the benchmark yield. In that situation, ARC-CO payments would be initiated if the final MYA price drops below $4.32 per bushel, compared to PLC payments being initiated at a final 2025 MYA price below $4.26 per bushel. If the final 2025 county average yield is 2 percent above the BM yield, which is only 3-4 bushels per acre in most Midwest counties, both ARC-CO and PLC payments would be initiated below $4.26 per bushel. If county average yields rise above county benchmark yields, the odds of receiving a higher 2025 ARC-CO payment compared to a PLC payment are diminished. The final corn MYA price from 2014-2019 was below $4.26 per bushel and resulted in corn PLC payments from 2015-2019. The recent MYA prices were $4.53/bu. in 2020, $6.00/bu. in 2021, $6.54/bu. in 2022, and $4.55/bu. in 2023. The current 2024 MYA corn price estimate is $4.25/bu., which would be very near the 2025 PLC reference price of $4.26/bu.
 

• Are there other considerations regarding the farm program choice for corn in 2025 ?

The PLC program for 2025 will provide corn price protection with potential PLC payments extending from $4.26/bu. down to $2.20/bu. The maximum PLC payment in most Midwest counties is probably $250 to $290 per base acre, while the maximum ARC-CO payment is probably $85 to $95 per base acre. For farm operators that are very concerned about potential significant corn price declines later in 2025 into 2026, the PLC farm program choice for 2025 provides a nice “safety net”. For producers that are less concerned about future corn prices, but are more concerned with the potential for drought in 2025, ARC-CO may be a better farm program choice for corn in 2025.

• What are factors that affect the 2025 farm program decision for soybeans ?

The 2025 soybean benchmark price is $12.17 per bushel and the 2025 reference price is $9.66 per bushel. The MYA price needs to drop below $9.66 per bushel to initiate 2025 PLC payments. The only time since 2014 that the MYA price has dropped below $9.66 per bushel was in the 2018 and 2019 marketing years, which were during the “trade war” with China. At a 2025 MYA price of $9.66 per bushel and a 2025 county yield the same as the benchmark yield, there would be a significant soybean ARC-CO payment for 2025. USDA has not made a PLC payment for soybeans in any year since the PLC program was initiated in 2014.  
 
At a final MYA price of $12.17/bu., the final county yield for 2025 will need to be 15 percent or more below the 2025 county benchmark yield to initiate a 2025 soybean ARC-CO payment, which equates to a 2025 county average yield decline of 7-10 bushels or more per acre in most Midwest counties. Given the current soybean price projections, the 2025 farm program choice probably leans toward ARC-CO in most instances; however, the odds of a 2025 ARC-CO payment will be dependent on the soybean price trends following the 2025 harvest season, as well as the final 2025 county average yield.
 

• What about the 2025 farm program choice for wheat ?

The PLC reference price increased by $.06 per bushel to $5.56 per bushel for 2025, while the ARC-CO benchmark price for wheat increased to $6.72 per bushel for 2025. The final wheat MYA price was below $5.56 per bushel from 2015-2020, with substantial PLC payments earned in many of those years; however, the recent MYA wheat prices have been $7.63/bu. in 2021, $8.83/bu. in 2022, and $6.96/bu. in 2023. The current projected 2024 MYA price is $5.55/bu. The calculations for comparing PLC and ARC-CO as a 2025 farm program choice for wheat in 2025 are very similar to the calculations for corn. Generally, wheat producers have tended to favor the PLC program over the ARC-CO program in recent years, due to the favorable PLC payments from 2014 to 2020; however, the higher ARC-CO benchmark price for 2025, along with the price and yield uncertainty, makes the 2025 farm program decision more challenging.
 

• Are there situations where ARC-IC might be a favorable farm program choice ?

The program utilizes the same BM price and final MYA price as the ARC-CO program; however, ARC-IC is based on farm-level yields rather that the county-based yields. The ARC-IC program must be applied to all covered commodities on a given FSA farm unit, and all farm units in a State that are enrolled in ARC-IC are considered together in one ARC-IC calculation. In addition, ARC-IC payments are paid on only 65 percent of crop base acres, compared to payments on 85 percent of base acres for PLC and ARC-CO payments, which tends to limit instances where ARC-IC is a favorable farm program option.
 

• How is the “Market Year Average” (MYA) price determined ?

All 2025 PLC and ARC-CO payments for corn and soybeans will be based on the market year average (MYA) price from September 1, 2025, through August 31, 2026, which means that the current price levels may not impact the final 2025 MYA prices. The MYA price is a monthly average farm-level price from throughout the U.S. that is then “weighted” for the volume of bushels sold in each month. The 2025 MYA price marketing year for wheat and small grains runs from June 1, 2025, through May 31. 2026.
 

• What are some good PLC/ARC-CO resources to assist with farm program decisions ?

For official information on PLC and ARC-CO programs, and other farm program details, go to the FSA farm program website at: www.fsa.usda.gov/arc-plc. Kent Thiesse, farm management analyst, has prepared an information sheet titled “2025 Farm Program Decision “Cheat Sheet”, which is available by sending an email to: [email protected]. Following are links to some very good farm program calculators to estimate potential 2025 PLC and ARC-CO payments at various final MYA prices and final county yields: 

• University of Illinois FarmDoc website --- https://farmdoc.illinois.edu/
• North Dakota State University --- https://www.ag.ndsu.edu/farmmanagement/farm-bill
• Kansas State University --- http://www.agmanager.info/ag-policy/2018-farm-bill
• Iowa State University ---  https://www.extension.iastate.edu/agdm/

For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Group
Phone --- (507) 381-7960; E-mail --- [email protected]