Repealing these key safety nets, which are designed to help manage revenue and price risks for commodity crops like corn, soybeans, wheat, and rice, would have significant consequences for farmers (which in turn affects rural economies.) Let’s break that down a little:
The ARC and PLC programs provide financial assistance to farmers when crop prices or revenues fall below certain thresholds. If repealed, farmers would be more exposed to price fluctuations and yield variability, which could be particularly destabilizing in years of low prices or poor harvests. In the absence of these safety nets, periods of low prices could drive some farmers out of business, particularly smaller or more marginal producers. At the very least, it reduces income stability for farmers, which would lead to increased farm bankruptcies and financial stress in rural communities.
Bakst is correct that crop insurance is already a key tool for farmers, but ARC and PLC provide additional layers of protection. Without them, farmers might need to rely more heavily on crop insurance. While this could work for some, insurance generally doesn’t cover price drops as well as ARC and PLC, so farmers would still face greater exposure to price-related risks. Result: Farmers may have to buy more comprehensive and expensive crop insurance, increasing their operational costs without fully replacing the benefits of ARC and PLC.
More potential outcomes of this in the full contextual analysis of Section 3.1: Department of Agriculture here.