It would be difficult to specifically answer without entering the data from your FSA letter into the decision aid. But a major element in the decision is what your expectations are for yields and prices in the next five years and the financial needs and risks for your farm.
The legislation was designed to provide risk management support to agriculture by means of a safety net. The PLC alternative has an immediate floor price per commodity and payments are triggered when national average prices are below the fixed price. The ARC-CO support is determined by revenue (national prices and county average yields) using the most recent five years of national average prices and county average yields, dropping each year with the highest and lowest. If prices or revenues fall below the guarantees, payments will be triggered on a percentage of the base acres on the farm.
The PLC references prices are set by statute and become a floor price to assure a producer that program crop prices do not fall further. The ARC revenue guarantee provides a payment should prices in a given year fall below the recent average of prices. One would make a choice based on their expectation of prices and/or yields. The Agricultural Policy Analysis System (APAS) tool uses historical information, forecasted prices and yields (e.g., using trends to forecast county average yields) to forecast expected program payments. Hundreds to thousands of calculations under these simulated outcomes are made and averaged to achieve the expected program payments.
Decisions regarding updating payment yields, reallocating base acres, and selection of a farm program remain with the land, regardless of the owner or operator. Any decisions made prior to the February 27 and March 31 deadlines in 2015 will affect any future owner or operator of that land. Future operators would receive payments based on selections made by prior operators.
You can consult any crop insurance agent for your choice of coverage for either ARC or PLC (Price Loss Coverage). Neither of those programs will serve as risk management for yield loss, and their revenue loss protection would be much less than what a revenue insurance policy might provide. The purpose of a farm program is to provide a financial safety net, and is not a crop insurance product. If your choice of program is PLC, you would be eligible to purchase a Supplimental Coverage Option (SCO) policy that covers the risk from a 14% loss to the level of coverage you typically choose for crop insurance.
Yes, any payment earned from the ARC-CO program is made on 85% of base acres for the crop, whereas any payment under ARC-IC is made on 65% of the total base acres on the farm.
The APAS tool shows an expected payment for the 2014 crop year year as well as averagepayments over the five-year horizon. National average prices and either county or individual yields are used to determine expected payments and how the current crop year compares to the most recent 5 crop years will determine the size of the payments.
APAS simulates many different prices and yields in each year. The average of those prices will be the expected price entered into APAS. Historical variability is used to account for the variability around both prices and yields. This procedure accounts for the fact that prices and yields are not known with certainty
The Bar chart at the very end of the APAS tool under the Safety Net tab shows the user the Probability (Y-Axis) of hitting the corresponding Target Revenue shown below on the X-Axis. The Green Bar is the probability of getting the revenue with ONLY the crops and no gov't programs (Crop Insurance or Commodity PLC/ARC Program). The next three bars are the probability of hitting the target revenue based upon the choices made previously with Crop Insurance and Commodity Program selections.