Over the past few months, we have been asked by producers on multiple occasions…since the ARC and PLC programs aren’t going to help very much why don’t we just forget it and use the money on crop insurance that does help? This article contains the answer we typically give to that question.
First, remember that the producer safety net is made of three parts: ARC and PLC, marketing assistance loans, and crop insurance. Over the past few years, ARC and PLC have not kept up in trying to offset producer losses that have occurred because of low commodity prices and extremely high costs of production. The marketing assistance loan program provides a harvest time loan to producers who need the cash flow but do not want to sell at harvest, which is typically the lowest prices of the year. Not all producers utilize the marketing assistance loan program; however, in the South, cotton producers have routinely used this program. At the same time, producers have reported that crop insurance programs (especially revenue insurance) have been a very useful safety net for their operations and that crop insurance was the most important part of the safety net. We cannot disagree with this assertation.
However, going forward, the One Big Beautiful Bill significantly increased reference prices used in both ARC and PLC while changes were made to the ARC program that will trigger payments sooner while covering bigger potential losses. These changes will help increase the value of ARC and PLC to producers. At the same time, in the current low-price environment, crop insurance will become relatively less helpful as insurance prices—which are based on a month of futures market daily closing values—are likely to be significantly lower than producers’ costs of production. Losses will still be covered; however, producers will be indemnified at levels far below recent years because the futures market prices are low.
The good news in all of this is when market prices eventually rise, insurance prices will rise with them. With higher prices, the ARC and PLC program will be less likely to trigger assistance. The marketing assistance loan program will still be useful to offer storage loans to allow producers to pay their bills while waiting for prices to increase. In this situation, what we see is that each of the three parts of the producer safety net are important and are designed to complement one another, but there will be times when each are relatively more important.
Outlaw, Joe, and Bart L. Fischer. “A Reminder That All Three Parts of the Producer Safety Net Matter.” Southern Ag Today 5(45.4). November 6, 2025. Permalink
