USDA has published the final 2020 Price Loss Coverage (PLC) payment rates for all covered commodities except rice, based on effective reference prices for the 2020 market year. Accordingly, the 2020 PLC payment rate for Seed Cotton has been finalized at $0.0277 cents per pound.
To calculate the final seed cotton PLC payment rate, seed cotton market year average price is calculated from the weighted average of the marketing year average prices for upland cotton and cottonseed. The marketing year for upland cotton is August 1, 2020 to July 31, 2021 and the marketing year for cottonseed is August 1, 2020 to February 28, 2021.
The PLC program is a commodity support program that makes deficiency payments when the marketing year average price for a covered commodity falls below a statutory reference price established by Congress.
PLC program payments are issued when the effective price of a covered commodity is less than the effective reference price for that commodity. PLC payments, when triggered, are calculated using a formula that includes a producer’s PLC payment yield multiplied by the final PLC payment rate and 85% of the farm’s base acres for each covered commodity.
All 2020 PLC payments are subject to sequestration and will be reduced by a percentage specified under budget reconciliation rules adopted by Congress.
In recent years the sequestration rate has been in the range of 6.2 to 6.6 percent. PLC payment reductions, due to sequestration, will be applied before farm bill payment limit rules are applied ensuring producers are able to receive the full amount of payments allowed under current farm program rules.
According to the Farm Service Agency (FSA), authorized program payments are being loaded into the USDA system now and should begin being issued within the next 10-14 days.
For the full listing of eligible covered commodities and final payment rates go to: https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/arc-plc/2020/pdf/2020_plc.pdf