ARC vs PLC: 2026 Election Guide
Every year, U.S. farmers with base acres must choose between two federal safety nets — Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). For the 2026 crop year the choice matters more than ever: the OBBBA law (signed July 4, 2025) raised statutory reference prices 10–21%, added 30 million newly eligible base acres, and 2025's automatic 'pay the higher one' rule is gone — annual elections are back. This guide explains both payment formulas step by step, works a full corn example through both programs, and gives you a decision framework for picking the program that fits your farm.
How the ARC/PLC Election Works
ARC (Agriculture Risk Coverage) and PLC (Price Loss Coverage) are the two commodity safety-net programs administered by the USDA Farm Service Agency (FSA). They pay when markets or yields turn bad — but they trigger on different things: PLC pays on low prices, while ARC-CO pays on low county revenue (price × yield combined).
Key election rules for 2026:
1. Annual election is back. For the 2025 crop year, farms were automatically paid under whichever program — ARC or PLC — produced the higher payment. Starting with the 2026 crop year, producers must once again make an active, annual election. Confirm the exact sign-up window with your local FSA office, as deadlines are set officially each year.
2. Election is by crop and by FSA farm number. You can elect ARC-CO for corn and PLC for soybeans on the same farm, or choose different programs on different FSA farm numbers. There is no single whole-farm choice — each covered commodity on each FSA farm gets its own election.
3. Three program options. PLC (price protection), ARC-CO (county-level revenue protection), and ARC-IC (individual farm-level revenue protection covering all covered commodities on the farm together). ARC-IC uses a 65% payment factor instead of 85%, and payments are based on your farm's own revenue rather than the county's.
4. Payments are made on base acres, not planted acres. Both programs pay on 85% of base acres for ARC-CO and PLC (65% for ARC-IC), regardless of what you actually plant. An additional 30 million base acres become eligible for payments starting with the 2026 crop year — check with FSA whether your operation qualifies.
5. Payment limit. The statutory payment limit is $155,000 per person or legal entity, indexed for inflation — roughly $164,000 for 2026. Program rules and limits are set by statute; confirm current figures with FSA.
New 2026 Reference Prices Under OBBBA
The OBBBA law, signed July 4, 2025, raised statutory reference prices for covered commodities by 10–21% — the first major update in years. Higher reference prices mean PLC triggers more easily and pays more when prices fall.
| Commodity | Old Statutory Reference Price | New (OBBBA) Reference Price | Increase |
|---|---|---|---|
| Corn | $3.70/bu | $4.10/bu | +10.8% |
| Soybeans | $8.40/bu | $10.00/bu | +19.0% |
| Wheat | $5.50/bu | $6.35/bu | +15.5% |
| Rice | $14.00/cwt | $16.90/cwt | +20.7% |
| Peanuts | $535/ton | $630/ton | +17.8% |
| Seed cotton | $0.367/lb | $0.420/lb | +14.4% |
But PLC does not use the statutory price directly. It uses the effective reference price:
Effective reference price = 88% × 5-year Olympic average of the marketing year average (MYA) price
Capped at: 115% of the statutory reference price
(It cannot fall below the statutory reference price.)
"Olympic average" means the 5-year average after dropping the highest and lowest years.
When market prices have been strong, the effective reference price rises above the statutory level (up to the 115% cap), giving PLC a higher trigger. When prices have been weak, it falls back to the statutory floor. Use our ARC-PLC Payment Calculator to run your own numbers.
The PLC Payment Formula, Explained
PLC is straightforward: it pays when the national marketing year average price falls below the effective reference price.
Payment rate = max(Effective reference price − max(MYA price, National loan rate), 0)
PLC payment per acre = Payment rate × PLC yield
Total PLC payment = PLC payment per acre × 85% × Base acres
Where: PLC yield = your farm's established program yield (bu/acre); MYA price = national marketing year average price; National loan rate = the commodity loan rate (a price floor in the formula).
Step by step for corn:
Step 1 — Find the effective reference price. Suppose the 5-year Olympic average MYA price for corn is $4.90/bu. 88% × $4.90 = $4.312. The cap is 115% × $4.10 = $4.715. Since $4.312 is below the cap, the effective reference price is $4.312/bu.
Step 2 — Compute the payment rate. Suppose the MYA price comes in at $4.00/bu (national loan rate $2.20/bu, so max(MYA, loan rate) = $4.00). Payment rate = $4.312 − $4.00 = $0.312/bu. If the MYA price were above $4.312, the payment rate would be zero — no payment.
Step 3 — Multiply by PLC yield. With a PLC yield of 150 bu/acre: $0.312 × 150 = $46.80 per acre.
Step 4 — Apply the payment factor and base acres. On 500 base acres: $46.80 × 85% × 500 = $46.80 × 425 = $19,890 total PLC payment.
The ARC-CO Payment Formula, Explained
ARC-CO (county option) pays when actual county revenue falls below 90% of benchmark county revenue. It protects against the combination of low prices AND low county yields.
Benchmark revenue = (5-year Olympic average MYA price) × (5-year Olympic average county yield)
ARC guarantee = 90% × Benchmark revenue
Actual county revenue = Actual county yield × max(MYA price, National loan rate)
Shortfall = max(ARC guarantee − Actual county revenue, 0)
Payment cap = 12% × Benchmark revenue
ARC-CO payment per acre = min(Shortfall, Payment cap)
Total ARC-CO payment = ARC-CO payment per acre × 85% × Base acres
The 12% cap means ARC-CO covers revenue losses in the band from 90% down to 78% of benchmark revenue — a "shallow loss" program. Deeper losses beyond that band are not covered by ARC-CO.
Continuing the corn example: the 5-year Olympic average MYA price is $4.90/bu and the 5-year Olympic average county yield is 175 bu/acre.
Step 1 — Benchmark revenue. $4.90 × 175 = $857.50/acre.
Step 2 — ARC guarantee. 90% × $857.50 = $771.75/acre.
Step 3 — Actual county revenue. Suppose the county averages 165 bu/acre and the MYA price is $4.00: 165 × $4.00 = $660.00/acre.
Step 4 — Shortfall vs. cap. Shortfall = $771.75 − $660.00 = $111.75/acre. Cap = 12% × $857.50 = $102.90/acre. Payment = min($111.75, $102.90) = $102.90/acre (the cap binds because actual revenue fell below 78% of benchmark: $857.50 × 78% = $668.85, and $660 < $668.85).
Step 5 — Total payment. $102.90 × 85% × 500 = $102.90 × 425 = $43,732.50 total ARC-CO payment.
Worked Example: 500-Acre Corn Farm, Head to Head
Same farm, same year, both programs side by side. Assumptions: 500 corn base acres, PLC yield 150 bu/acre, effective reference price $4.312/bu, MYA price $4.00/bu, national loan rate $2.20/bu, county Olympic average yield 175 bu/acre, actual county yield 165 bu/acre.
| PLC | ARC-CO | |
|---|---|---|
| Trigger | MYA $4.00 < effective ref $4.312 | County revenue $660 < guarantee $771.75 |
| Payment rate | $0.312/bu | $102.90/acre (capped) |
| × Yield factor | × 150 bu PLC yield = $46.80/ac | — |
| × 85% × 500 acres | × 425 = $19,890 | × 425 = $43,732.50 |
Verdict for this scenario: ARC-CO wins decisively — $43,732.50 vs. $19,890. Why? Because the county had a below-trend yield (165 vs. 175 bu), ARC-CO captured both the price dip and the yield dip. PLC only captured the price dip. But flip the scenario — a normal county yield of 175 bu with the same $4.00 MYA price — and actual county revenue would be $700, the shortfall only $71.75/acre (below the $102.90 cap), for a total of $30,493.75. Still ahead of PLC here, but the gap narrows. If county yields are strong while prices are weak, PLC can win. That is exactly why the decision framework below matters.
Decision Framework: When to Choose ARC vs PLC
Lean toward PLC when:
1. You expect prices to stay below the effective reference price. PLC is a pure price program — if your outlook is bearish on price but you expect normal yields, PLC is the cleaner fit.
2. Your county yields are stable and usually above trend. ARC-CO rarely triggers when the county consistently produces well; its benchmark keeps ratcheting on good years.
3. You grow crops with high reference prices relative to market. After the OBBBA increases, crops like peanuts, rice, and seed cotton have reference prices well above typical market levels — PLC triggers more readily for them.
4. Your PLC yields are strong. PLC payments scale with your farm's PLC yield, so farms with high program yields get more per acre from PLC.
Lean toward ARC-CO when:
1. Your county has volatile yields. Drought-prone, flood-prone, or highly variable counties trigger ARC-CO payments in bad yield years even when national prices are fine — PLC would pay nothing in that scenario.
2. You want protection against revenue, not just price. Most farms' real risk is revenue (price × yield). ARC-CO is the only one of the two that responds to a yield disaster.
3. Prices are expected near or above the reference price. If you don't expect PLC to trigger on price, ARC-CO gives you a free lottery ticket on county yield shortfalls.
Consider ARC-IC when: your own farm's yields are much more variable than the county's (so county triggers don't match your losses), or you farm across multiple counties and want one farm-level safety net. Remember the 65% payment factor and that it covers all your covered commodities together.
Practical tip: run both programs through the ARC-PLC Payment Calculator under at least three scenarios — low price/normal yield, normal price/low county yield, and low price/low yield — before you sign the election at FSA.
Common Misconceptions
Conclusion
The 2026 ARC/PLC election is a genuine choice with real money behind it: PLC protects you when prices collapse below the (new, higher) effective reference price, while ARC-CO protects county revenue when yields falter, prices sag, or both. Work the formulas with your own numbers — the ARC-PLC Payment Calculator runs both payment lines in seconds — test at least three price/yield scenarios, and remember the structural facts: election by crop and farm number, payments on 85% of base acres, a ~$164,000 payment limit for 2026, and 30 million newly eligible base acres. Pair your election with crop insurance (which covers deeper individual losses that ARC-CO's 12% cap doesn't) and a solid farm budget, and you'll have a safety net that actually matches your farm's risk.
Frequently Asked Questions
What changed about ARC/PLC for the 2026 crop year?
Four big things: (1) The 2025 one-year rule that automatically paid whichever program was higher is over — annual elections are back starting 2026. (2) The OBBBA law (signed July 4, 2025) raised statutory reference prices 10–21% (e.g., corn $3.70→$4.10/bu, soybeans $8.40→$10.00/bu). (3) An additional 30 million base acres become eligible for payments. (4) The payment limit is indexed, roughly $164,000 for 2026. Confirm enrollment deadlines and details with your local FSA office.
Can I elect ARC for one crop and PLC for another?
Yes. The election is made separately for each covered commodity on each FSA farm number. A common strategy is PLC for crops where you expect price risk (or where reference prices are high relative to market, like peanuts or rice) and ARC-CO for crops in counties with volatile yields. Each election stands on its own — there is no requirement to pick the same program for everything.
What is the difference between ARC-CO and ARC-IC?
ARC-CO is county-based: it pays when the county's average revenue falls below 90% of the county benchmark. ARC-IC is individual farm-based: it pays when your whole farm's revenue (across all covered commodities planted on that FSA farm) falls below 86% of your farm's benchmark. ARC-IC pays on 65% of base acres instead of 85%, and because it uses your own yields, it eliminates the county "basis risk" of ARC-CO. It suits farms whose yields don't track the county average.
What is the payment limit for ARC and PLC?
The statutory payment limit is $155,000 per person or legal entity, indexed for inflation — about $164,000 for the 2026 crop year. Payments above the limit are not made, so very large operations should factor the cap into their planning. Separate payment limits and attribution rules apply to entities; your FSA office can explain how the limit applies to your operation.
Do I need to update my base acres or PLC yields?
Possibly. With 30 million additional base acres becoming eligible starting 2026, some operations will have new base to enroll. PLC yields are generally fixed historically, but certain provisions allow updates in specific situations. Because base acre and yield rules have many farm-specific exceptions, check your farm's records with your local FSA office during the enrollment period rather than assuming your old figures still apply.
